ACOSS welcomes the Tax Green Paper as an important contribution to much-needed and genuine tax reform in Australia. ACOSS has advocated for many years for a fairer tax system that better serves the community.
ACOSS participated in the Roundtables organised by Ms Allegra Spender MP, Independent Member for Wentworth, and we appreciate her work to promote community debate and engage with civil society, business and unions to build momentum for tax reform.
The Green Paper identifies key areas that ACOSS agrees are an important part of the tax reform agenda, including:
- disparities between the tax treatment of wages and investment income,
- tax concessions like the Capital Gains Tax discount that undermine housing affordability
- inadequate returns to the nation from our mineral wealth, and the need to price carbon emissions.
ACOSS recommends going further with the reform agenda, to:
- lift overall public revenue to properly fund the services and income supports we need,
- respond to climate change, and
- ensure that tax is raised according to ability to pay so that the system reduces income and wealth disparities rather than aggravating them
ACOSS CEO Dr Cassandra Goldie AO:
"We congratulate Ms Spender for her work, tenacity and collaboration in seeking to set the stage for genuine tax reform in this country. We are a country that likes to champion a 'fair go' for everyone, but without major tax reform, Australia's tax system will remain anything but fair – favouring those with the most over those with the most need.
"Our unfair tax system is driving inequality in Australian society, increasing economic insecurity and social division.
"We support the call for the next federal government to use its authority, resources and political capital to build consensus on tax reform early in its term. It is imperative that the Paper's core priorities are part of that reform agenda to ensure that people and businesses pay tax according to their capacity.
"We strongly believe real and genuine tax reform is essential if we are to properly fund crucial services and income supports people need and meet the challenge of climate change while promoting sustainable growth in jobs and incomes."
Facts and figures on taxation in Australia
Australia is the ninth-lowest taxing out of 38 wealthy nations (as calculated by the OECD, in 2021 governments in Australia raised 29.5% of GDP compared with an average of 34.2%).
When properly assessed, our taxes on personal income raise less revenue than the OECD average (18% of GDP compared with 21%).
A worker on an average fulltime wage pays the same proportion of their overall income (as distinct from their marginal tax rate) in income tax (24.9%) as the OECD average (also 24.9%) and a similar amount to the average fulltime worker in the US (24.2%).
Australia taxes investment incomes of people with high incomes (for example a person on $200,000 p.a.) at far lower rates than the marginal tax rate for an average fulltime worker (30%).
For example, the tax rate on capital gains from sale of an asset for a high income-earner is 22.5% and the tax rate for investment income of their superannuation fund is a flat rate of 15% or zero if they have retired and the fund is paying them a pension.
