The cost burden projected to fall on future workers has been described as a generational tragedy. But it is also a very avoidable one.
It’s clear what needs to be done. Australia is not a high-taxing country. But the way it collects its taxes imposes too many distortions that blunt incentives to work and to invest in growing businesses.
While Australia’s ratio of income tax to total tax is the second highest of 38 OECD nations, the share of consumption taxes is the seventh lowest. The indirect tax share has fallen back to the same level as when John Howard proposed the goods and services tax in 1997.Shifting the tax burden away from income by cutting personal income tax and company tax and increasing the 10 per cent rate of the GST, and removing carve-outs such as food, would reduce the damage to incentive and productivity.
None of this is what Treasurer Chalmers calls an “old agenda”, or what Scott Morrison dismissed as “retro”. They are mainstream answers for the here and now.
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