Growing Tax Burden May Impact Future Australian Generations, Experts Warn

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Wentworth’s Independent Member of the Parliament, Allegra Spender, recently headed a tax reform roundtable in Canberra. The meeting tackled several topics, specifically the expected decrease in government revenue sources in the following years.

According to the teal independent, the Australian government’s revenue sources are decaying due to several factors like the Stage Three cuts, lower fuel tax and the Goods and Services Tax (GST). Spender also noticed that taxing workers more heavily would translate the burden of this issue to future generations.

Spender added, “According to the OECD, around 40 per cent of Australian government revenue comes from personal income taxes, which compares to an OECD average of 24 per cent. So Australian workers are funding a much larger government share than workers overseas. Unchecked, this will continue to grow over time.”

Former treasury secretary Ken Henry was also part of the roundtable and added that the country faces a looming crisis due to an ageing population. Henry said that intergenerational equity was going backward.

Henry, the architect of a major inquiry into the tax system in 2002, also added that the country was in a worse position now compared to 2002 as the heavy tax burden to “cover increased spending on health and other services needed by an ageing population.”

Robert Breunig, Tax and Transfer Policy Institute director at ANU, added that Australia is at a high risk of becoming similar to Italy, wherein it is a rich country where citizens and assets did well but remain unattractive for immigrants and younger generations.

Breunig added, “We have this incredible mix of free markets and good labour market institutions, with fantastic policy. We have one of the best health systems in the world, and we have one of the best retirement income systems in the world. We are a great country to be an immigrant. It’s a place where you come and work hard and do well and move up.”

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