Prosper Australia condemns the latest Federal Budget as a missed opportunity for much-needed tax reform.
There is broad economic consensus, alongside calls across business, social, and environment sectors, that Australia’s future sustainability depends on a shift to the tax base.
Our current tax system, unchanged for nearly 30 years, enables a massive wealth shift from those who don’t own land to those who do. The harm this system causes low-income people is now extending to middle income earners, who are now also either struggling to afford a first home, or can’t afford to pay for the one they own now credit is no longer almost free.
The Ponzi scheme that is Australia’s property market is on the verge of collapse. For decades land prices have continued to outgrow wages exponentially, to the point where buying a first home and having any quality standard of living is unrealistic for most people. But those fortunate to have stepped onto the property ownership ladder before the turn of this century the windfall gains are huge. Retirement lifestyles never seen in the history of humanity are being lived, as though earned – when many stopped full time work at 55. Current generations are now being asked to pay for that lifestyle rather than property owners selling surplus properties, downsizing or taking equity from their homes to live off. The Treasurer, on behalf of the rest of the Albanese government, has done nothing to change the tax settings to redress this cavernous inequity.
Somewhat predictably, the opposition response to the housing crisis was to focus on immigration. We see immigration measures to have at best a short-term impact on prices. Our 2023 Pandemic Rental Dynamics report (pdf) showed that even with a 100% drop in immigration, the effects on housing prices were small, and short-lived.
If our elected politicians are serious about future proofing the wealth and prosperity for all Australians they would be designing a tax reform package to move taxes off wages and businesses and onto monopoly incomes (rents). This would increase productivity, put downward pressure on property prices and shift the burden of social services and infrastructure onto those who benefit from asset wealth. This would also enable the establishment of a proper sovereign wealth fund designed to invest in the energy and manufacturing transitions we need to remain globally competitive.
We need a Tax Shift.
Changes we would like to see:
- Income tax reforms to ensure greater consistency across income types.
- Increase taxes on superprofits, and reduce taxes on normal profits.
- Redesign structure of resource taxes to ensure monopoly rents are sufficiently captured.
- Establishment of a resource tax funded Sovereign Wealth Fund.
