The Business Council of Australia wants to raise GST in return for a halving of corporate tax rates in its latest Henry Review submission. This will increase the regressive rate of taxation upon the less privileged.
With effective corporate tax rates at barely 5% due to the plethora of tax loopholes, this proposal will do nothing to reduce boom-bust blowouts, let alone a future based on economic justice.
If that’s the best the leading lights of the business community can do, then it is no wonder the social fabric of society is falling apart.
However, the Federal Treasurer Wayne Swan has poured cold water on the BCA’s GST proposal within hours of its announcement, saying it is one of the few areas of taxation that is off limits to the Henry Tax Review.
“There’s only one exclusion, or two exclusions that we’ve put in place in terms of Henry: we’ve said we’re not going to raise the GST which I see has been put on the agenda today by one of our business organisations,” he said.
“That aside, the one other exclusion, it is a genuine root and branch review of the tax system.”
Whilst that last quote may get tongues wagging, Swan forgot to mention that the second exclusion was superannuation related. We are concerned that this week’s Henry Review tax summit in Melbourne is an ‘invite only’ affair and that none of our 11 submission authors were invited. This suggests that the inclusion of land rents as a plausible tax option is also being excluded.
This is a concern in an age where globalisation is threatening resource sovereignty, tax loopholes abound, infrastructure deficits have a 20 year backlog, urban sprawl forever dominates, environmental refugees are looming and carbon speculators are soon to make a killing.
And yet the BCA wants to ignore this and look after their own lot.
If land rents are allowed to be capitalised into higher and higher land prices, the stresses on the community will threaten our very freedoms. Ross Gittins quoted taxes on immovable property as the most efficient tax in his Monday article ‘A light on the hill for future tax reformers :
This view is that, in an ever-more globalised world where the barriers between national economies are being broken down, the least mobile factors of production should be taxed most and the most mobile factors should be taxed least.
This suggests a hierarchy of taxes running from the least economically inefficient and hence most growth-enhancing to the most inefficient and growth-inhibiting. So, running from best to worst, we have: recurrent taxes on immovable property (such as land tax and council rates), consumption taxes, personal income taxes and company income tax
Treasury officials would do well to read Gavin Putland’s Recessions Begin at Home and Dr Terry Dwyer’s submission to the Henry Review.
