Publication date: 14 Oct 20 |
Source: THE TAX INSTITUTE
SYDNEY, 14 October 2020: The downturn in Australia’s economy was “stunningly fast and stunningly deep,” said Director of Deloitte Access Economics, Chris Richardson in his keynote session for The Tax Summit: Project Reform on Friday. As we plan for a recovery from the COVID-19 pandemic, we should consider taxes as a lever for prosperity.
Richardson said, “as a simple generalisation” we have two economic levers to work with, spending and taxes, which can be used to pursue two targets, fairness and prosperity. While fairness in our economy is driven largely by spending, improving prosperity is driven by tax.
“To improve prosperity, you want a tax that doesn’t do damage to prosperity,” he said.
But economics is a give or take game and the goal is a balance between fairness and prosperity. Richardson pointed out that while personal taxes tend to hit highwealth households, spending taxes like the GST have more of an impact of lower income families.
“Both of those things are fine. And if you want to make a change to the GST, if there’s a case for that, then you need to understand it’s going to worsen some fairness, so you might need to do some spending [to compensate lower income families],” he explained.
“It is important for you not to get lost in the fairness debate when it comes to tax. We can fix fairness … but tax is a prosperity story. Not every dollar of tax has the same impact on the economy.
Some types of taxes absolutely crush prosperity. For every dollar they raise they can shrink the economy by 70, 80 cents in that dollar.”
Tax reform, Richardson argued, is about shifting the tax burden towards taxes that aren’t hurting the economy, such as municipal rates and land tax, rather than those that do, for example, stamp duty and company income tax.
“We have an overreliance on both corporate taxes and personal taxes. … We overrely on the [taxes] that are more damaging for our prosperity.”
Chris Richardson delivered his keynote session as part of The Tax Summit: Project Reform, an ambitious series of events, leading to a Virtual Summit in November, through which The Tax Institute is building a case for change in our tax system.
The next keynote speaker is The Hon Peter Costello AC, on Friday 16 October.
For more information, please contact:
Kelly Emmerton – Media Contact, The Tax Institute email@example.com 02 8223 0029
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