MELBOURNE and CANBERRA:- Australians had high hopes the Tax Forum would herald the end of taxes that distort and diminish economic activity as Ken Henry recommended. Sadly, these hopes have been dashed, says Prosper Australia.

“Citizens are taxed too much – especially the income tax on their hard-earned wages and salaries,” Prosper Australia Campaign Manager David Collyer said today.

“Income tax destroys the incentive to work. We tax tobacco to deter smoking. Taxing work has the same effect: deterrence. It is economic madness to tax virtuous behavior like work and trade.

“There is a superior economic base for government revenues right under our noses: Land Value Tax and the originally proposed Resource Super Profits Tax.

“The great beacon – Dr Ken Henry’s Australia’s Future Tax System – looks unlikely to be enacted as the Gillard Government lacks the solid majority needed for root and branch reform.

“The Henry Review recommended removing 125 taxes that have a myriad of negative consequences – ones that are hard to collect, that diminish economic activity, are actively evaded by those who can, that increase the price of exports, that prompt substitution by other untaxed items, and on and on.

From Canberra, preparing for a showing of the documentary Real Estate 4 Ransom at the Dendy Cinema tonight, Prosper Project Coordinator Karl Fitzgerald said:

“Broadening the tax base was code for the battle to tax the poor by expanding the GST. The great reform, taxing land by replacing Stamp Duty with Land Value Tax so higher value locations pay more is being ignored. for tickets and full details of the national tour.

“The main central activities areas (CBD and adjoining commercial precincts) of Sydney and Melbourne are approximately equal in value to all the land in the rest of NSW and Victoria. Property in these key areas are approximately 60 per cent owned by absentees – foreign owned.

“The value in these great assets is created by our economic activity and our investment in infrastructure. These land values are the best base available for government revenues.
“No prizes for guessing which 1 per cent of the population received the greater part of the $338 billion in community-created economic rent that went uncollected, or why the world has descended into financial collapse. Tax systems have given all the wrong signals, rewarding speculative activity and fining labour, capital and thrift.

“Whilst the top 1 per cent have done exceptionally well out of rent-seeking, the rest of us are laden with debt, and the Australian economy is showing signs of ineffective demand.
The need for an all-in land tax is obvious, and, although some will argue for it at the tax forum, it’s not on the agenda of any of our politicians. They have power brokers to appease and satisfy,”
Fitzgerald said.
“Prosper values that Australia has a small government, compared to the countries we usually measure ourselves against. We have no interest in enriching government at the expense of taxpayers, nor in starving it for the benefit of a few. We simply want a fair and equitable tax system.”

Economic activity in our country would take off like a rocket if the Income Tax Act disappeared”. ENDS

Media comment: David Collyer

About Prosper: Prosper Australia is a tax reform lobby group and think tank that is now 120 years old. It seeks to move the base of government revenues from taxing individuals and enterprise to capturing the economic rents of the natural endowment, notably through Land Value Tax and Mining Tax.