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Allegra Spender has released her review of Australia’s tax system, calling for sweeping changes to address inequality and boost productivity.
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Teal MP details top tax reform priorities in green paper
25 November 2024
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Independent MP Allegra Spender has outlined her case for depoliticised, sweeping tax reform in a much-anticipated green paper, calling for lower income and business taxes, fewer concessions for property investors and a reduction in compliance costs.
The member for Wentworth said the tax system was a barrier to home ownership and burdening young Australians – a trend that was only set to worsen due to bracket creep and an ageing population.
“Tax reform has never been more urgent,” Spender said.
“When I started this green paper process 18 months ago tax reform was off the table, with both major parties so scared of tax that their biggest commitment was to do ‘absolutely nothing’.”
“Now tax reform is finally in the frame. Not because either of the major parties have shown real courage, but because economic reality is setting the agenda.”
The green paper, released last week, identified six areas of tax reform to respond to challenges facing younger workers, Australia’s declining productivity levels and the energy transition.
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These included lower income taxes on working Australians, cutting tax concessions that favoured investment in existing dwellings rather than home ownership, and incentivising innovation and business investment to increase productivity and economic growth.
Spender said investment allowances, accelerated depreciation, lower tax rates and raising the turnover threshold of $50 million for the 25 per cent company tax rate were all options on the table to ensure corporate taxes maximised productive investment.
The paper also discussed the compliance costs of payroll taxes, fringe benefits tax (FBT) and interactions with the ATO impeded productivity.
“There would be substantial savings if states and territories adopted common definitions, even if there was no change in the total amount of [payroll] tax paid,” it said.
“Given the potential productivity gains available, any federal-state compacts on tax reform could include incentives or conditions for states to align their payroll tax systems.
It also advocated for a rebalancing of tax settings to stabilise the revenue base with changes to demographics and consumption patterns, as well as supporting the energy transition through increasing taxes on the production of fossil fuels and reducing fuel tax concessions.
Finally, Spender said institutional reform, including a Tax Reform Commission, would be needed to “continually review the effectiveness of the system rather than letting the problems slowly amass until they are seemingly insurmountable”.
The Tax Institute backed Spender’s call for a depoliticised tax reform debate.
“It's time to stick to the facts, not the fear many election campaigns rely on. The fact is, our tax system is not sustainable. It’s time to focus on our future,” Tax Institute CEO Scott Treatt said.
“If the lives and future of our children are not the call to action needed, what is?”
The Australian Council of Social Service, which participated in the roundtables Spender organised for the green paper, said tax reform was essential to properly fund services and income support for people in need.
“Our unfair tax system is driving inequality in Australian society, increasing economic insecurity and social division,” said CEO Cassandra Goldie.
“We support the call for the next federal government to use its authority, resources and political capital to build consensus on tax reform early in its term.”
“It is imperative that the paper’s core priorities are part of that reform agenda to ensure that people and businesses pay tax according to their capacity.”
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