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Former finance head calls for substantial increase in tax take

The Australia Institute 2 mins read

Media release | Friday 27 October 2023

Former Department of Finance head Michael Keating will use a speech to the Australia Institute’s Revenue Summit 2023 at federal parliament to call on the Albanese government to substantially increase taxes to keep pace with public expectations for service delivery.

He will warn that budget pressures from the care economy, health, education and housing and education will continue to rise significantly over coming decades and call for the following measures to turbocharge the country’s ability to pay for them:

  1. Taxes that would improve efficiency, such as a carbon tax, congestion charging, and substituting a land tax for stamp duty.

  2. Lifting and broadening the GST 

  3. Introducing a resource rent tax so the community can share some of the super profits that mining companies make due to fortuitous circumstances, rather than their effort or initiative.

  4. Cracking down on company tax avoidance, taking up Ross Garnaut's call to substitute a tax on corporate cash flows for the present company tax

  5. Closing loopholes in the personal income tax system, such as the inadequate rate of capital gains taxation and negative gearing

  6. A more progressive income tax rate scale, with the starting point at least adjusting the Stage 3 tax cuts. But Keating says a full-scale review of the rate scales would be better.

Keating will tell the Revenue Summit:

  1. The budget fails to recognise the extend of additional funding needed over the long-term for aged care, child care social housing, hospitals and primary healthcare, tertiary education, income support, reducing carbon emissions, and defence and foreign aid

“There is no correlation between present overall levels of taxation and any country’s economic growth rate,” he will say.

“Many high taxing countries in northern Europe for example, have a higher growth rate in their per capita GDP than low taxing countries such as America. Similarly, the drop in Australian income tax rates in the 1980s was not associated with any increase in employment participation or productivity growth. And Australia is already one of the lowest taxing countries among the developed nations of the OECD.”

Keating will also suggest that tax as a proportion of GDP should increase by 4 per cent, but says this would not harm economic growth. 

“There is ample evidence that government services and assistance in Australia are presently under funded, and service provision is therefore inadequate,” he will say.

“The only way to fix this is to increase the amount of taxation revenue. But this will require an important change in government policies, which are founded on almost no significant change to taxes. 

“And while the Government seems to be sympathetic to many of the demands for improved services, it is most unlikely to change its tax policies without popular support. 

“So we need to change the public debate. The public needs to accept that you cannot have adequate service provision without paying more taxes.“

Who: Former Department of Finance head Michael Keating at the Australia Institute’s Revenue Summit 2023

When: 11.15am Friday 27 October 2023

Where: Australian Parliament House, Canberra
https://australiainstitute.org.au/event/revenue-summit-2023/

Media contacts:
Anil Lambert 0416 426 722
Georgie Moore 0477 779 928

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