06 Oct 099 Towards a better taxation of savings
On 1 October 2009, Dr Ken Henry, Chair of Australia's Future Tax System Review Panel and Secretary to the Treasury, gave an address entitled "Towards a better taxation of savings" to the Australian Conference of Economists Business Symposium.
Dr Henry summed up his address as follows:
"We have a system for taxing personal capital income that has evolved into something that is, to put it mildly, far from the originally intended ideal.
Further, the case for staying true to that original ideal now appears weak; while the case for moving to the other conceptual ideal is not strong either.
Meanwhile, we have a tax system for household saving that has not been calibrated to address the challenges of population ageing and the financing of unprecedented levels of business investment and infrastructure.
While we can see that we have a system that is ripe for reform, we can also see a complex set of tradeoffs in respect of the choice of the savings base, the choice of rate and the forms in which such a tax might be levied. Judgment is required.
Over the next couple of months, we will be refining our judgements on these important issues as we finalise our report on the tax and transfer system."
For a copy of the address, go here