He's only been arguing for tax reform since he first took the helm of Treasury's tax policy division in 1984 but Ken Henry's passion for the subject seems undiminished nearly four decades on | Jess_Irvine
“Just call me a ‘has been’,” jokes Ken Henry on the phone from his farm up near Port Macquarie, where he’s spent lockdown with his wife, two adult children and their families.
“I do think there’s an opportunity to simplify the administration of the GST. Rather than have our invoice and credit method, I think we could have a direct subtraction method tax, which is effectively what a cash flow tax would deliver. I think there’s an opportunity to do that. I think there would be benefits in doing that because it would be simpler, lower compliance costs and would give us an opportunity to rethink the appropriate base for the tax.”“Absolutely. Long overdue. Gotta happen.
"The big problem here - which the review points to - is that there is no clearly settled allocation of roles and responsibilities between the Commonwealth and the states. So, both states and the Commonwealth see every problem as their political problem, that they have to fix. And so they’re always bending over backwards to come up with a new bright idea to fix a problem that is probably not really their responsibility at all, you know, constitutionally, but politically of course it is.
Henry says he remains committed to these and other ideas from that review, including cutting company and income taxes.On the need to cut company taxes, Henry says: “We have to. We don’t have a tax system that’s capable of generating sufficient business investment and that’s doing enormous economic damage."“Or, a redesign, and this is where the other case for cash flow taxation comes in. But it gets really complicated.
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