Without tax reform to repair the budget’s long-term structural deficit, the OECD says there’s a risk of a higher reliance on income tax paid by working-age people.
Treasurer Jim Chalmers has been urged to consider removing GST exemptions on private school fees and healthcare, while compensating low-income households for raising more revenue from Australia’s globally low consumption tax.
“High personal income taxation can have adverse impacts on economic growth, largely through weakening the attachment of below-average income earners to the labour market and reducing the marginal benefits to higher income earners of increasing labour supply,” the survey said. “This implies that income channelled through the schemes is undertaxed over the lifecycle, particularly for richer people with high marginal tax rates,” the OECD said.“A package of changes includes taxing superannuation earnings in retirement at 15 per cent and capping pre-tax contributions at $20,000.”“only 18 per cent of Australians aged 65 and above pay income tax”.
“Further efforts to understand and evaluate the various complex trust structures that exist and the value of income being directed through them would be worthwhile.”On the GST, the OECD recommended eliminating exemptions for education, healthcare, food, water, sewerage and drainage, while introducing compensation for low-income people.services tax base and consideration should be given to raising the rate.
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