Tax reform
* The ALP & LNP promise budget surpluses, but deliver massive deficits.* Federal govt gross debt is now over $800 billion. (The debt was "only" $54 billion in Dec 2007).
* Too much debt always ends badly.
* Nobody wants to pay more tax.
* Nobody wants their services reduced.
* One third of govt spending, goes on welfare!
The inconvenient truth: The government needs to reduce spending (or increase taxes) just to balance the budget - let alone start paying down debt.
The ALP & LNP are effectively bankrupting future generations - spending TODAY the tax payments of FUTURE generations, leaving future generations with massive govt debt to deal with.
Future generations will pay their taxes, only to discover that their tax money has already been spent by: Rudd govt, Gillard govt, Abbott govt, Turnbull govt, Morrison govt.
Some tax concessions are unfair and should be removed.
Almost 50% of superannuation tax concessions go to the top 12% of income earners, with the current system especially biased against very low income earners and women.
The solution requires reduced spending and taxation reform:
Multinational tax avoidance:
We will tighten related party transactions for foreign domiciled multi-national corporations (MNC), to prevent profits generated in Australia being reduced to low levels (or zero) by accounting “tricks.”
We will legislate full disclosure of accounts.
We will not recognise tax haven (low tax jurisdiction) identifications.
We will legislate full disclosure of the ultimate beneficial owners.
MNCs that refuse to co-operate, will be taxed on their revenue - not their (artificially low) profits.
Capital gains tax 50% concession:
Under the present rules, a taxpayer who purchases an asset and maintains ownership for at least 12 months, only has to declare HALF the capital gain as taxable income when the asset is sold.
We will reduce this 50% concession to 25%.
The estimated tax leakage from the present 50% concession is more than $5b/year.
The family home will remain CGT exempt.
Superannuation (contributions phase) tax concession:
An employee can salary sacrifice (instruct employer to pay an extra portion of salary into superannuation account instead of receiving that money as salary). This additional superannuation contribution money is currently taxed at a flat rate of 15% into the fund (or 30% for portion over $300k salary).
High income taxpayers (45% marginal tax rate) are currently only taxed at a low 15% tax rate.
A fairer system would have all employer contributions (compulsory and additional) taxed by the employer at the employee’s marginal tax rate (0%, 19%, 32.5%, 37%, 45%).
The estimated tax leakage from the present 15% flat tax arrangement is greater than $16b/year.
GST: (No change)
Stay at 10%.
Marginal tax rates (Resident): (No change)
0%: $0 – $18.2k
19%: $18,201 – $37k
32.5%: $37,001 – $90k
37%: $90,001 – $180k
45%: $180,001+
Company tax rate: (No change)
Stay at 30%
Negative gearing:
Existing arrangements already in place, will be allowed to continue.
In future, only newly constructed properties to benefit from this arrangement.
Paul Keating (1985) called NG an, "Outrageous rort."
Malcolm Turnbull (2005) called NG, "Tax avoidance."
Dividend franking credits:
The imputation system was established (by the ALP in 1987) to end the double taxation of dividends – good idea.
The Howard LNP government changed the rules to provide tax refunds of some (or all) the company tax paid on the shareholding, if the taxpayer’s tax rate was lower than the company tax rate (and the dividends were fully franked).
For example:
A company makes a profit of $100.
It pays $30 tax to the ATO.
It pays a fully franked dividend of $70 to the shareholder.
If the shareholder has a 0% tax rate, the ATO gives back ALL of the $30 tax paid, to the shareholder.
Thus, NO tax is paid on that profit by either the company or the shareholder.
We will end these tax refunds for EXCESS franking credits – i.e. return the system to the way it was originally.
Superannuation funds are currently taxed at 15% for accumulation phase, which means they receive dividends PLUS a tax refund of half the company tax paid (for fully franked dividends) on their shareholdings because their tax rate (15%) is half the company tax rate (30%).
We will implement taxation reform