Urgent tax reform has been called for in Australia, after fears COVID-19 could leave future generations with enormous debt.
Industry leaders gathered at the 2020 COVID-19 National Tax Summit on Monday (3 August), agreeing certain aspects of Australia’s tax system were not supporting the economy as well as they should.
Summit host and director of the Australian National University’s Tax and Transfer Policy Institute, Professor Robert Breunig, said there should be a change in the way tax is gathered.
“Currently, you could potentially have an older couple worth $5 million and they are getting hundreds of thousands of dollars as tax free income.
“But then you could have a young person working at a coffee shop and living on the poverty line having to pay tax.
“It’s not hard to fix; we could put in a low tax rate on all kinds of savings. We would be raising it evenly and what that does is make sure everyone is paying something.”
Professor Breunig said while the government’s economic support had been suitable throughout the pandemic, it was important to put measures in place to manage public debt levels.
“I’m not suggesting we just take money from the old people; this would affect me too. I’m talking about taxing everyone an amount and being fair,” he said.
“But people have gotten used to this idea that they can have a lot of wealth and pay no tax and that will be hard to implement.”
He also expressed concern the increasing number of people using creative tax planning to avoid paying their full taxes would compound the other issues.
Those who attended the summit, including Grattan Institute CEO Danielle Wood and former Treasury Secretary Dr Ken Henry, agreed it would be up to the young to repay the increasing public debt if changes were not made.
However, Professor Breunig said he was worried most young people would not concern themselves with these issues in the short term.
“Young people don’t vote much on tax because despite being the people it will affect the most, they aren’t paying much attention,” he said.
“Ultimately, the government support we have received this year has been great, but down the line young people are going to have to make decisions to pay more tax or have less government services like health and education.”