Voluntary simple tax returns
Medicare-style disability levy
Resource rent tax
Road congestion charges
Taxing the family home
Axing real estate stamp duty
Axing payroll tax
Boosting the 9% super levy
Tax indexation for capital gains
Voluntary simple tax returns, longevity insurance, a Medicare-style disability levy and incentives to keep Australians in work head a list of recommendations from the Henry Tax Review focused on aging alongside those designed to deal with increasingly mobile capital including a 40 per cent mining resource rent tax.
Contentious recommendations include pay-as-you-drive road congestion charges, fringe benefits tax for charities, and a uniform alcohol excise that would push up the price of wine relative to beer.
Many of the recommendations in the 10-centimetre thick report delivered to the Treasurer in December will cause the government trouble. Some ideas, such as lifting the age of access to super, have already been ruled out.
Many of the reported "leaks" have not made it into the final report, among them taxes on the family home, axing real estate stamp duty, abolishing payroll tax and reintroducing indexation for the taxing of capital gains...
The report opens with a narrative chapter that explains that Australia's tax system stacks up well but that it will be severely tested by the aging of the population and a growing shortage of workers.
Because Australians are living longer and private insurers have largely deserted the field of providing income until death it recommends the government consider selling longevity insurance in exchange for super payouts and raises the possibility that such insurance be compulsory.
It canvasses a Medicare-style disability levy of around 0.4 per cent as a means of providing care to the 2.3 million Australians expected to be disabled by 2030. It deals with this only briefly noting that a Productivity Commission inquiry is under way
The committee has found against lifting compulsory super contributions above 9 per cent believing that a higher rate would harm the working incomes of low-wage Australians.
It recommends removing barriers to Australians considering work, raising the possibility of lower tax rates for older Australians, and changes that would cut the effective tax rate facing mothers considering returning to work.
It finds that as a general principle the tax rates facing saving should be lower than those facing wages and notes that bank interest is taxed more heavily than other forms of saving, but stops short of recommending that all forms of saving be taxed the same.
Superannuation would retain its tax-preferred status, but the benefits would be more evenly spread so that high income contributors no longer did many times better than low-income ones.
Reporting that one of the chief concerns raised by the Australians who attended tis public meetings was paperwork it recommends changes that would make simple tax returns optional.
When it began its deliberations in mid-2008 the committee believed Australia's 30 per cent corporate tax rate would need to be sharply cut in order to remain internationally competitive, but by the time it reported it was less enthusiastic finding that the global financial crisis had blunted the prospect of overseas tax competition.
Its recommendation that existing state based mining royalties be replaced with a national profit-based Resource Rent Tax perhaps set at 40 per cent was yesterday labeled an "outrageous Canberra tax grab" by Western Australia's Treasurer Troy Buswell.
"The only valid point Ken Henry makes is that royalties could be higher but this would make us an outpost of Canberra," he said.
"We already subsidise rustbucket states like NSW and if the Commonwealth attempts to override our long-held rights to royalties there’s every chance that would continue at an even faster pace. There are a lot of votes and seats in NSW."
The BHP Billiton share price yesterday slid 97 cents on the news, the Rio Tinto share price $2.61.
The Treasurer has had the final report of the review for a month and plans to release it soon.
Published in today's SMH and Age
. What to expect from Ken Henry
. It's time to properly tax super, and the 50% discount for capital gains looks silly as well - Henry
. So, this idea of pay-as-you-drive taxes, what's it all about?