Ten months is certainly a long time in politics.
In October 2015, newly appointed Prime Minister, Malcolm Turnbull, gave an interview with Neil Mitchell whereby spelled-out his vision for tax reform, noting that “everything” was on the table:
Malcolm Turnbull: We have to look at the tax system. The tax system is the single biggest thing that the Federal Government does that incentivises and dis-incentivises economic activity. If you tax something, people will do less of it – generally… There are a lot of changes that can be made to the tax system, which would improve the efficiency of the system… The tax system as it stands delivers a certain amount of money every year. The question is, can it be adjusted… Change has got to be orderly, it’s got to be well understood, it’s got to be well explained, it’s gotta be accepted.
Neil Mitchell: Superannuation, negative gearing, capital gains, GST, everything’s gotta be on the table?
Malcolm Turnbull: Everything is on the table, that’s right… We will certainly be making decisions in the lead up to the Budget and obviously if we have major tax reforms, we will take them to the next election.
Then in November, Turnbull preached that “fairness” must be central to tax reform:
“Any package of reforms which is not and is not seen as fair will not and cannot achieve the public support without which it simply will not succeed. Fairness will be central,” he told an economic summit in Melbourne…
“The primary purpose of taxation is provide the revenues to pay for schools, hospitals, infrastructure and a strong social safety net,” Mr Turnbull said.
“But we need to ensure the taxes we impose to collect these revenues aren’t overly distorting the economic decisions which workers, businesses and consumers make”.
In February 2016, Turnbull reiterated that “everything is being looked at” in terms of tax reform:
“Corporate concessions, superannuation… there’s a whole range of areas… We are looking at all of these areas. This is a very thorough evidenced-based examination… Everything is being looked at [including negative gearing]…”
The rest is history. The Budget and Federal Election rolled around and we saw the Coalition largely abandon its tax reform efforts, save for some much-needed tweaking to superannuation concessions and a daft and costly long-term reduction in company tax rates.
Now it appears that the Turnbull Government has shut the door completely on tax reform, with the taskforce set up within Treasury to lead the tax white paper process to be disbanded. From The AFR:
Tony Abbott promised a tax white paper “well within” his first term as prime minster and in March 2015 former Costello adviser Robert Jeremenko was drafted in to head up the Tax White Paper Unit.
A lengthy discussion paper attracted hundreds of submissions from a long list of stakeholder groups but no white paper was ever produced. Nor was there a green paper, for that matter…
Prime Minister Malcolm Turnbull has indicated there will be no major tax changes in this term beyond the government’s superannuation package and progressive company tax cuts…
Sources said the Tax White Paper Unit was always intended to be temporary and it would be officially wound up within weeks.
It’s going to be difficult for the Turnbull Government to fulfill its “jobs and growth” mantra and repair the Budget without further tax reforms to improve both efficiency and equity.
As long as Australia’s tax system continues to favour speculation over genuine productive investment, assets over income, and the old over the young, the Budget and economy will remain structurally stuffed.
Malcolm Turnbull continues to disappoint as Prime Minister. He clearly has no vision and no plan for Australia.
