Australia Needs to Drop Inefficient Tax Breaks
January 30, 2015 Taxation in Australia
CANBERRA – The Australian government could reach a budget surplus without cutting spending, if it begins to remove inefficient and poorly targeted tax breaks, concessions, and allowances.
On January 29th the non-government organization Australian Council of Social Service (ACOSS) issued a new statement urging the national government to concentrate on closing unnecessary tax loopholes and concessions in order to reach a budget surplus, instead of focusing on cutting spending.
According to the experts of the ACOSS, in 2015 the government could improve the budget by as much as AUD 13 billion, and by as much as AUD 18 billion in 2016 by removing tax benefits aimed primarily at middle- and high-income earners.
In its statement the ACOSS indicated that in 2015, AUD 6.6 billion of the estimated savings could be realized just by dropping the currently available rebate for private health insurance, while another AUD 2 billion could be obtained from clamping down on the use of trusts and other corporate structures to minimize personal tax obligations, approximately AUD 800 million could be saved by extending the taxation of superannuation, and AUD 2.2 billion could be found by dropping tax rebates which primarily benefit wealthy taxpayers.
It was also recommended that the current regulations regarding the negative gearing of expenses on investments be reformed, mandating that the expenses, such as interest, arising due to investment should be deductible only from that investment, and not the taxpayer’s entire income, as is currently the case.
It was also noted that if the government attempts to reach a budget surplus by cutting spending, it will invariably reduce the quality and extent of services provided to the community.
Photo By: Martin Howard