The whole issue is tax. And the elephant in the room is that Australia’s tax policy is seriously flawed. We are over-reliant on personal income tax, with the top 3% of taxpayers contributing 30% of the income tax revenue and the 17% in the next bracket contributing 39%. That means 20% of taxpayers are paying 69% of Australia’s income tax.
The next most important source of revenue is company tax. Australia has one of the highest company tax rates in the world and we need to reduce it to be more competitive. But we need to raise money from other sources to do this.
The next source of income is royalties, and one of our biggest sources of royalties is the coal industry, which contributes over $6 billion a year to state governments. Coal is now our largest export as well as the dominant fuel in our energy mix. Yet the Left want to ban coal mines – if that happened our national income would plummet.
Where Australia sits well behind the rest of the world is in its consumption tax. Thanks to some courageous work by John Howard, GST was introduced in July 2000. Ironically, that only got up because of the support of Meg Lees of the then Australian Democrats. It cost her her job, as the party rebelled, but at least we got a GST in place.
The reality is that we have an ageing population with a decreasing number of taxpayers paying income tax to fund the growing number of retirees who pay no income tax. If we accept that those who remain to pay income tax are being squeezed, that company taxes may drop, not rise, and that income from royalties is under threat, the obvious solution is to raise the GST from 10% to 15% with no exceptions. Given the adversarial nature of politics that is most unlikely. But it’s a debate we have to have.
Of course, not everybody was happy with the election result. Left-wing novelist Jane Caro tweeted that the election result was a sign Australia had “decided to be a backward-looking country – I wish I was a New Zealander.” I couldn’t resist the right of reply, tweeting, “Wouldn’t we all — no capital gains tax, no payroll tax, no stamp duty, and a top personal tax rate of 33% on incomes over $70,000. The exact opposite of what Labor was proposing.”