Intergenerational fairness will be central to any tax reform by the federal government, Jim Chalmers says as he opens the door to increased taxes on superannuation, trusts and capital gains.
The treasurer has not ruled in, or ruled out, a rewrite of the tax system, despite a three-day roundtable in Parliament House agreeing that it was deeply unfair to younger Australians.
Wrapping up the summit, Dr Chalmers conceded the tax system was “imperfect”, especially when “seen through an intergenerational lens”.
“One of the defining outcomes of this economic reform roundtable was building consensus and momentum around ensuring that intergenerational fairness is one of the defining principles of our country, but also of our government,” he told ABC radio on Friday.
“And that’s certainly something that we will pick up and run with.”
Tax experts, including some who attended the roundtable, say Australia relies too heavily on taxes on wages and salaries while under-taxing passive income derived from savings and other wealth.
Grattan Institute chief executive Aruna Sathanapally said the burden on younger working Australians was growing “automatically” due to bracket creep.
“If we don’t do something else to raise revenue, we’ll just end up relying more and more on wages and salaries,” she told ABC Radio National.
“It’s not clear that the amount of concessions that we give to savings is at all necessary for people to save, and it’s not clear that it’s particularly fair.
“In fact, I’d say it’s particularly unfair when you look at the position that retiree households now find themselves, where they can earn the same income as a working household and pay potentially less than half the tax.”
Former Treasury secretary Ken Henry, who also spoke at the roundtable, has described the growing burden on workers as a “wilful act of bastardry”.
Independent MP Allegra Spender said retiree wealth was surging, while young people are flatlining.
“For the last three years I have been pushing the parliament to put tax reform on the agenda, to help young Australians achieve the same milestones as their parents, and drive productivity and investment in our businesses,” she said.
“The treasurer announced that the government will start to work to these objectives, and I am delighted.”
But the coalition is wary of any tax changes under a Labor government.
“If they go ahead and try and increase taxes, that’ll be a major breach of faith with the Australian people,” opposition finance spokesman James Paterson said.
While tax reform faces further consultation, Dr Chalmers announced a number of ideas that could be delivered faster, such as a road user charge that ensures EV drivers contribute to road maintenance costs.
Senator Paterson was supportive of the proposal.
“Everybody agrees that it is not fair that some road users who fill up their car with petrol and diesel pay the costs of maintaining roads, and some road users who have an EV don’t contribute to that cost,” he told ABC radio.
Business groups welcomed promises to speed up building approvals, remove nuisance tariffs and red tape, and fast-track an overhaul of environmental laws.
Business Council of Australia chief executive Bran Black said the government needed to act on the goodwill from the roundtable and make the reforms come into effect.
“It sets us a bit of a course for how we can go about progressing real action over the course of the next months and years ahead. It’s time for the rubber to hit the road,” he said in Canberra.
Dr Chalmers flagged further talks to flesh out the specifics of a road user charge model when state and territory treasurers meet in September.
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