Colin Brinsden, AAP
Treasurer Joe Hockey has released his much-awaited tax paper to help guide discussion on a ‘lower, simpler and fairer’ taxation system.
He says it is part of the government’s reform program aimed at creating jobs, growth and opportunity.
Many of Australia’s international competitors are changing their tax systems to make them more competitive.
‘Australia can’t risk falling behind,’ Mr Hockey said releasing the discussion paper on Monday.
About 70 per cent of commonwealth tax revenue is collected from personal and company income taxes.
‘Australia’s heavy reliance on income taxes may be unsustainable,’ he says.
This over-reliance is projected to increase further, largely as a result of wages growth leading to individuals paying higher average rates of tax, or so-called `bracket creep’.
He warns around 300,000 Australians are expected to move into the second highest tax bracket in the next two years.
Furthermore, in just 10 years, nearly half of all taxpayers will be in the top tax brackets – 43 per cent of taxpayers rather than the 27 per cent today.
The rise of the digital economy and globalisation also presents significant challenges for the effectiveness of the tax system.
‘Our current tax system, which was designed before the 1950s, is ill-suited to the 2050s,’ the treasurer says.
‘Capital is more mobile and we need a competitive corporate tax regime to encourage investment.’
At the moment a dozen companies pay around one third of Australia’s company tax.
Submissions and suggestions on the discussion paper are due by June 1.
These responses will inform the government’s tax options Green Paper, due to be released in the second half of 2015.
‘The government will seek further feedback on those options before putting forward policy proposals for consideration by the Australian people in 2016,’ he said.