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16 Sep 11 Preamble - Friday 16 September

This week we have seen various public comments about the inadequacy of holding a tax forum to consider ‘root and branch’ tax reforms, without including the GST in the discussion.  As one of the biggest revenue raisers, it is the elephant in the room when it comes to the Government’s October forum.

The GST conversation will continue, but another issue I will be debating at the forum is the tax transfer system.  The Federal Government pays approximately 40 different cash transfers (worth over $70 billion) to Australians in the form of welfare payments, family benefits and the like.  This money churn represents more than one-quarter of all government spending.  The Henry review looked at these transfer payments in detail and flagged reform.  This would be achieved via a simplified structure with a new delivery platform.  This would combine with a new retirement income policy to better address equity, longevity, aged care and disability and carer needs.

The review suggested three categories of income support payments: pension, participation and student assistance.  Payments would be more consistently indexed to keep pace with inflation, but they would also be subject to a more comprehensive means test.

The cost of a complex and inefficient tax transfer system is disproportionately borne by the most vulnerable in our society.  Dr Cassandra Goldie, CEO of the Australian Council of Social Service, spoke to this at our recent Great Tax Debate (you can watch the web stream here).

Please feel free to be in touch with me at Tax Policy with your ideas and reform proposals.

Please read on for further details of other activities this week.
Regards

Robert Jeremenko FTIA


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