Re the AFTS Tax Forum in Melbourne late last week, a number of articles came out highlighting points favourable to our cause.
The review, chaired by Treasury secretary Ken Henry, is due to deliver its report to the Government by the end of this year. Professor Sorensen, a corporate tax expert, is one of several leading international economists brought out to advise the review on possible directions for reform.
His joint paper with Mr Johnson proposes a radical change to Australia’s corporate tax system, allowing companies to deduct a standard return to shareholders — roughly 5 per cent on their equity — from their taxable income, cutting company tax by up to a third.
They suggest the cost to revenue — up to $24 billion a year — could be filled by closing long-established loopholes in the taxation of capital income, including:
– Closing the negative gearing loophole used by more than a million housing landlords, by imputing a standard profit margin on rental housing investments.
– Taxing home owners an imputed rent on the annual value of their housing.
Whilst there was the usual acceptance of land rents being the most efficient method, we need a public education campaign on how this can help avoid future boom busts.