Tax reform

Julian Disney at the CrunchTime conference summarised the case for tax reform. (If I can access a link to his presentation I will post it). He is Professor and Director of the Social Justice Project at the University of New South Wales. He is Convenor of TaxWatch. He is Chair of the National Affordable Housing Summit and National Chair of Anti-Poverty Week. He is Chair of the Community Tax Forum.

The Community Tax Forum argues for the Henry Review to ensure our future tax system promotes economic and social development and create a fairer society which will benefit all Australians on an efficient, equitable and sustainable basis.

It is essential that our tax system generates enough revenue for the delivery of high quality essential services and benefits for the Australian public.

The Community Tax Forum was established last year by the ACTU, Australian Council of Social Service and the Consumers’ Federation of Australia to ensure that the Henry Review takes full account of community, union and consumer views in its recommendations.

The ACTU Secretary Jeff Lawrence said the Henry Review should help position Australia to deal with demographic, social, economic and environmental challenges of the 21st century. “The ultimate goal of tax reform should be not just to benefit business and the economy, but to promote a better society. At its heart it must be fair and equitable, not just in redistributing wealth, but in the provision of services a modern, developed society is entitled to.”

Australia’s recovery from the economic slowdown may take longer because of biases and inefficiencies in the tax system.

The tax system contributed to the conditions for a financial collapse that is now impacting on the entire economy.

By international comparisons, Australia is a low taxing nation.

ACOSS chief executive Clare Martin said at the february Canberra forum that reform must focus on removing tax shelters and loopholes from the tax system to ensure people on higher incomes pay their share of tax and governments have revenue to provide essential services for all Australians.

“A fair and efficient tax system would strengthen Australia’s economy in the long term and mean Governments can fund essential community services like health care, schools and housing.”

Ms Martin said there must also be a fairer and simpler system for tax breaks for contributions to superannuation in place of the present system where half or more of the value of tax breaks goes to the top 5% of workers.

ACTU Secretary Jeff Lawrence (see press release 25/2/2009) said that under the Howard-Costello Government, Australia’s tax system contributed to a culture of greed, through a lack of restraint on tax avoidance by high income earners and short-term risk-taking by businesses.

“We need to come out of the downturn with a more equitable and robust tax system in which everyone pays their fair share, and which sustains revenues and spending on essential services.

“Reform also needs to remove loopholes and incentives for tax avoidance among high paid executives and practices that promote excessive risk taking by businesses.”

The CFA is focused on superannuation and the inequities in the tax scheme, particularly for low-income earners.

“This reflects a broader concern to ensure that equity, not just efficiency, underpins our tax system” said Catriona Lowe, Chair of the Consumers’ Federation of Australia.

The ACTU has called for a higher rate of tax for salaries above $1m a year.

Tighter business regulations and curbs on executive pay are essential to protect jobs in the economic downturn, say unions (ACTU press release march 09).

Corporate Australia needs to exercise more restraint and put the jobs and livelihoods of working Australians first.

“The selfish and greedy behaviour we have seen in the business community in recent years is now causing untold damage to the lives of working Australians and their families.

“Executive salaries and bonuses have been out-of-control and it’s totally unacceptable that these companies are now sacking workers.”

“Working Australians are outraged at the pay packages awarded to executives and directors at companies like Telstra, ANZ, Pacific Brands and BHP, who have all made thousands of workers jobless in recent weeks.

“Moves to curb excessive bonuses and remuneration are overdue and more needs to be done to break the link between executive pay and short-term investment decisions.

“Executives, directors and shareholders should be obliged to consider the long-term interests of the company and its workers, rather than chase rewards that put at risk the viability of a business.

“There is nothing more insulting to workers than to see an executive rewarded for poor performance with a multi-million golden handshake when they leave a company.

“One of the main reasons for the global financial crisis has been the self-serving link between greed of high paid executives who received big bonuses and made risky investment decisions.

“Companies that pay their executives salaries of more than $1 million should also be subject to a 30% penalty tax, which would give them a powerful incentive to rein in excessive remuneration.

The ACTU’s tax policy can be accessed www.actu.asn.au

ACTU Your Rights at Work