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The Great Tax Debate

Published on 31 Aug 2011 | Took place at Sydney , National

Following are presentations given at The Great Tax Debate including:

  • the principles underpinning an efficient and equitable tax system
  • the Henry Review – A liberal critique
  • the inefficiencies in and distortions caused by our tax system
  • the impact of tax reform proposals on lower income earners and housing affordability in Australia
  • a process to implement a tax reform agenda
  • tax reform: Priorities and prospects.

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Individual sessions

The Great Tax Debate - Panel B

Author(s):  Greg SMITH,  Henry Ergas,  Adam Creighton,  Cassandra Goldie This video covers information delivered by Panel B at The Great Tax Debate.

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The Great Tax Debate - Panel A

Author(s):  Mathias Cormann,  Rob Oakeshott This video covers information delivered by panel A at The Great Tax Debate.

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A process to implement a tax reform agenda

Author(s):  Rob Oakeshott This video discusses the progress and achievements of the present parliament, policy debates about productivity, competition and jobs, and manufacturing, the dangers of protectionism, and unwarranted nervousness about China and India. It argues that the moral and economic challenge of our time is access and participation rates in education. Information and communication technology, natural resource management and industrial relations are seen as other areas that are critical for Australia. Much work needs to be done on Commonwealth–state–local government relations. On the Henry Review, the presenter believes that the tax reform debate is best approached with the assumption that every recommendation is worthwhile and should be discussed seriously. It is essential to assess every recommendation, applying a national interest test only. Finally, small and micro business should be given a voice in tax reform debate.

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The principles underpinning an efficient and equitable tax system

Author(s):  Mathias Cormann This video discusses the principles which should underpin an efficient and equitable tax system. It says that any Australian Government intent on advancing genuine tax reform should be prepared to genuinely engage and reach agreement with state and territory governments about the federal/state financial relations implications of any tax reform. Based on this principle, the video argues that the taxes introduced by the present Commonwealth Government were not designed on the basis of good long-term public policy, but were designed to generate additional cash for the government quickly. These include alcohol taxation, the tax on the northwest shelf gas project, the increase in the luxury car tax, the mining and carbon taxes. The video argues that, having received the Henry Review report recommendations, the government should have engaged in proper, structured, open, transparent and inclusive consultation. Finally, it outlines the Coalition’s preferred approach to tax reform.

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The impact of tax reform proposals on lower income earners and housing affordability in Australia

Author(s):  Cassandra Goldie This video discusses the role of the Australian Council of Social Service (ACOSS) in framing the current debate about tax reform, and why it is important for ACOSS to be part of the debate. ACOSS highlights several areas of the taxation and transfer system which are, in its view, in urgent need of reform. These include the user-pays system for the provision of social services, fairness in the imposition of taxes, efficiency, especially in relation to differential taxation of labour and investment income, poverty and participation, Australia’s current retirement arrangements, and affordable housing. This video also discusses perceived problems which are not seen as important to the debate, including the tax mix and the overall rate of taxation, and investment from overseas.

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The inefficiencies in and distrortions caused by our tax system

Author(s):  Henry Ergas This video discusses the urgent need for tax reform, given the likelihood of shrinking revenue and, ultimately, permanent deficits if current government revenue to GDP and current entitlements are maintained. In addition, Australia’s tax system is, in many respects, seen as seriously distorting. In the presenters view, reform of our tax system will consist of several major components. The first is that we must move towards a tax structure that has more sensible tax bases and taxes those bases in a more sensible way. The second component involves tackling our dysfunctional system of fiscal federalism. Finally, we must consider the sustainability of entitlements and how to fund them into the future. The presenter then discusses how such reforms may be achieved, and recommends an independent fiscal commission that reports annually to government.

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Tax reform: Priorities and prospects

Author(s):  Greg SMITH Australia’s Future Tax System (AFTS) Review (the Henry Review) has provided a strategic direction for the future development of the tax and social transfer systems. This video considers the priorities and prospects for further tax reform in the coming few years. The presenter discusses previous tax reform processes in Australia, tax analysis, key drivers and their reform implications, and recent and current trends in tax reform overseas. The video then examines Australia’s existing tax circumstances and strategies, constraints, especially political, on medium-term reform, and medium-term priorities and prospects for tax reform. Several reform possibilities are then examined, including tax on mainstream savings, retirement savings and income, land and land transfers, alcohol taxation, road pricing and funding, financial services, and achieving a more neutral business tax base. The video then discusses the major structural tax reform proposals of the AFTS Review, and concludes with observations on the tax reform process.

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The Henry Review - A liberal critique

Author(s):  Adam Creighton There are two principal answers to the question: “How should tax be allocated, given a particular revenue requirement?” One answer is the “ability to pay” principle. The other is the benefit theory, which says that those who benefit most from government should pay the most tax. The “ability to pay” principle has won out as the principle for allocating taxation. But what is the best practical measure of ability to pay? Income, consumption and wealth are all candidates. In this video, the presenter examines the Henry Review and its recommendations in the light of liberal principles. The article discusses proposals for reform of consumption taxes (the GST), state taxes and the federal system, the complexity of tax laws, the abolition of a range of levies and tax offsets, a “standard” deduction, and capital taxation. The video concludes with some remarks on the outlook for reform in Australia.

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