Calls for the Henry Review to be Dusted Off

By David Shaw, WSC Group CEO & Founder

david.shaw@wscgroup.com.au

The most confusing part of our tax system is the different rates of tax in relation to different asset classes. It is so frustrating that income classes such as interest are taxed at marginal rate but capital gains, for example, have a 50% capital gains tax discount. Add to the fact that super is generally taxed at a contribution rate of 15% (unless you earn over $250,000 adjusted taxable income and then you can double this) but your principal place of residence is tax-free – no wonder the average taxpayer is confused!

Those who haven’t heard of the Henry Review, it was established by the Rudd Government in 2008 to examine Australia's tax and transfer system, including state taxes, and make recommendations to position Australia to deal with the demographic, social, economic and environmental challenges of the 21st century. The Review made a total of 138 recommendations, of which 3 were adopted.

Perhaps it is time for everyone to put politics aside and have a serious look at how we can streamline our tax system for the 21st century. Some ideas come to mind:

1. GST increased to 15%
2. Abolition of payroll tax and stamp duty
3. Top marginal rate of tax being 26% in line with the company tax rate
4. A flat 40% discount on all capital gains, interest income and net positive gearing income

Sounds a lot like what John Hewson wanted to accomplish in 1994, particularly with GST and the abolition of payroll tax and stamp duty.

Let’s hope that we can get some agreement from politicians so we can move forward as a lower taxing nation to give incentive to create jobs and grown our economy.