Retailers put focus on whole tax system, not just GST

The GST is more difficult to avoid - if the rich want to spend they have to pay tax.

A higher and wider GST would leave room for lower income taxes. In particular, it would allow a more much more generous transition from welfare to work. At present, many people on welfare, particularly low-skilled people with children, have little incentive to go to work. After they pay childcare and other costs for going to work they are little better off financially despite the loss of time and effort to work.

The system should be changed so that tax is not a disincentive for people to work.

And income tax should be indexed to stop the absurd merry-go-round of bracket creep followed by so-called tax “cuts”.

The taxes on superannuation are far too generous to people over 60 with large accounts. We are taxing on the way in and on earnings in the fund and not on withdrawals. It should be the other way around.

Capital-gains tax needs an overall. The halving of the tax rate after an asset is held for more than a year is distorting. Also, the removal of indexation means that in a high-inflation environment the tax can be higher than the real gain, even with the 50 per cent concession.

A better system would taper the concession at, say, 5, 7.5 or 10 per cent a year until assets became free of capital gains liability after they had been held for a significant time.

This would enable the tax to be imposed on the principal residence.

Sure, tax is difficult for politicians. Losers scream very loudly. But Australia’s tax system is messy, complicated and inefficient. Yes, we can bumble along with the present system, but overall it is not working well - that’s why we had the Henry review in the first place.

In this year of decision and delivery, the Government should revisit the Henry review. It should remove the no-go areas of the original review and seek other options.

The tax debacle was not limited to the mining tax. The effective ruling out of all the other options was the worst policy failure.

A well-led government should be able to explain the need for wide tax reform. It should be able to throw the proposals to a wide debate without scaring the horses.

Further, comprehensive reform is less subject to silly Opposition mantras like “a great big new tax”, the more so if the Government says that nothing is ruled out and that nothing will be ruled in without wide debate and consultation.