Jason Falinski backs higher taxes on inheritances
“More and more money is being accumulated by lazy capital, and that’s problematic.”
“But if you have a go and it works, we’re going to tax the shit out of you.”
More than $120 billion was passed on in 2018 and Baby Boomers will bequeath an estimated $224 billion each year by 2050 thanks to record housing and super wealth, according to the Productivity Commission.
Concessions behind ‘a waste of human capital’
Unlike many countries, inheritance and monetary gifts are usually tax-free in Australia, except for a limited 17 per cent inheritance tax on a superannuation fund for non-dependents including children. It excludes the owner-occupied homes and other assets outside super.
Personal income tax delivers about half the government’s tax take – among the highest in the advanced world – and is poised to hit a 30-year high later this decade, despite the Morrison government’s tax cuts that largely return bracket creep, Parliamentary Budget Office analysis shows .
Mr Falinski also said the vast array of tax concessions allowed a “waste of human capital” in Australia because many of the country’s smartest people became tax lawyers and accountants to exploit concessions for clients.
“If you live in Israel, the United States or the UK, really smart graduates do computing science or engineering,” the Sydney MP said.
“In Australia you become a tax barrister.”
A bipartisan push is building behind the scenes for both the coalition and Labor to seriously consider overhauling the outdated tax system after the election, despite resistance from political leaders.
Craig Emerson, a former Labor minister in the Rudd-Gillard governments and official reviewer of the party’s 2019 election loss, said economic reform would “necessarily include tax reform, in which the Morrison government has no discernible interest.”
“If the Albanese opposition dared mention the words ‘tax reform’, the coalition frontbench would scream ‘death tax’, ‘housing tax’, ‘retirees’ tax’ and ‘carbon tax’, as they scour documents for what Albanese said at NSW Labor conference 30 years ago when, wait for it, he referred to the conference chair as ‘Comrade Chair’, Dr Emerson writes in The Australian Financial Review.
“Building the political case for microeconomic reform would require the next prime minister and treasurer to spend some time explaining the problem they are trying to fix, as Hawke and Keating did in the 1980s.”
“Treasurer Josh Frydenberg tasking the Productivity Commission to undertake its second five-yearly review of Australia’s productivity performance is a welcome beginning. Let’s hope the report, due in a year, triggers a new reform effort by whoever forms government.”
No appetite for tax reform talk
Shadow treasurer Jim Chalmers said Labor’s priority was ensuring multinationals pay a fair amount of tax where they make their profits.
“We have not proposed a tax review but we will always take seriously the views put forward by experts and all corners of the community to ensure our tax settings are right for working families and the economy,” he said.
Labor and Coalition backbenchers privately said there was no appetite for their leaders to talk about tax reform before the election.
Labor’s surprise election loss three years ago was partly blamed on its tax crackdown on franking credits, negative gearing, trusts and capital gains.
Liberal senator Andrew Bragg said on Monday that tax reform “never ends. As I said in my first speech in 2019: we ought to look again to reduce the direct tax burden on workers and enterprise.
Big tech revolution can’t be ignored
“Inevitably, we must talk to the states about achieving a meaningful tax mix switch that boosts efficiency and competitiveness whilst maintaining fairness.
“This reform effort is even more important in the face of the big tech revolution.
“This revolution will end up eating the corporate tax base through disruption of traditional businesses and traditional corporate structures.
“The race to stay globally competitive is real. If we are not competitive in the age of big tech, we will be a banana republic.
“The good news is we have taken some important steps.
“Frydenberg’s patent box and Board of Tax review on crypto tax clearly signals that Australia is open for business.”
Personal income tax cuts
The top 10 corporate taxpayers contribute about one-third of the $100 billion of annual corporate tax.
Mr Frydenberg sidestepped media questions about holding a serious income tax review, arguing the government was already introducing a 17 per cent rate for new patents in the medical and biotechnology sectors and eliminating the 37 per cent personal tax bracket.
About 95 per cent of taxpayers would face a top marginal rate of 30 per cent (plus the 2 per cent Medicare levy) by July 2024, he said.
Michael Buckland, chief executive of the left-leaning, Labor-aligned McKell Institute, said: “The pandemic proved the need for strong government services and they can’t be delivered without an equally fair and efficient tax system.
“We won’t hear much during the election but it can’t be ignored forever.”
Australian Council of Social Service chief executive Cassandra Goldie criticizing the government’s scheduled income tax cuts, which Labor has supported.
“ACOSS has called on the federal government to prioritise investment into critical services and boosting the incomes and wages of those in the bottom 40 per cent over more tax cuts in the upcoming budget,” Dr Goldie said.