Let's broaden the conversation beyond GST

There's been lots of chat this week about the GST, so let's get one thing clear: GST hikes are not the best or most equitable way to increase revenue.

The GST taxes everyone at the same rate regardless of their level of income, hitting low income households the hardest, disproportionately raising revenue from low income earners. This makes our tax system less fair and increases the gap between the haves and the have nots.

In the 2014 budget, the Abbott Government handed down an enormous $80 billion cut in funding to states – a $30 billion cut in funding for schools, and a $50 billion cut in funding for hospitals. The truth is that states simply cannot afford to absorb these cuts.

Healthcare now eats up about 25% of state budgets, and costs are growing as medical services become more expensive and our population continues to age. Likewise, state government spending on schools is forecast to rise faster than GDP in years to come. Even Liberal state leaders must recognise that the Commonwealth has a role to play in raising more revenue to fund ballooning health and education costs.

Disappointed by this Government's approach to tax reform? We are too. That's why GetUp members teamed up with the best policy brains in the business to develop a suite of ground-breaking budget alternatives, premised on a fair go for all Australians. Learn more by watching GetUp's budget response video.

So far, the debate has been focussed on NSW Premier Mike Baird's push for a GST increase from 10pc to 15 pc. Mr Baird supports raising the rate of the GST without expanding the base.

• SA Premier Jay Weatherill may support a GST increase if the poor are adequately compensated. He also supports expanding the GST to apply to financial services.
• WA Premier Colin Barnett is open to a GST increase if WA receives a bigger share of revenue.
• TAS Premier Will Hodgman does not support a GST increase but is willing to listen to arguments for change.
• VIC Premier Daniel Andrews does not support a GST increase and is instead proposing an increase in the Medicare levy.
• QLD Premier Annastacia Palaszczuk does not support a GST increase.
• ACT Chief Minister Andrew Barr supports changes to the GST so long as they are part of broader tax reform.
• NT Chief Minister Adam Giles is prepared to debate a GST increase.

Source: 'GST reform push has four premiers on board', The Australian, 21 July 2015.

Below is a summary of each policy included in The Australia Institute's Brighter Budget report, fully funded by GetUp members. You can discuss any one of these, or make the case for revenue reform more broadly. Remember, writing about what you're personally most passionate about, and putting it into your own words, will make your email more impactful.

• Reform superannuation tax concessions. Scrap wasteful tax breaks for the wealthiest Australians who don't need them to stay off the age pension. Instead, give the bigger breaks to everyday Australians, to ensure everyone can retire in dignity and fewer people need the age pension in years to come. This could save $10 billion per year and new Essential Media polling, funded by GetUp members, shows it's supported by 74% of Australians.
• Note: Labor recently announced a super tax reform policy that would tinker with concessions for the wealthy, clawing back $1.4 billion per year. A good beginning, but not enough. The Coalition has no reform policy and has sent mixed signals about coming up with one eventually.


• Introduce the 'Buffett Rule': A minimum tax on the wealthiest 1%. Thanks to tax loopholes and high priced accountants, 55 millionaires paid no tax at all in 2012-13 (not even the Medicare Levy). 'The Buffett Rule' would put a cap on loopholes for the top 1% of income earners by requiring them to pay at least 35% income tax, raising up to $2.5 billion per year. New Essential Media polling, funded by GetUp members, shows the Buffett Rule is supported by 79% of Australians, which means it's as popular as cracking down on multinational corporations who are avoiding tax, on which both major parties currently have policies.


• Cut fossil fuel subsidies. Right now, the Government spends over $11.5 billion a year on industry subsidies that incentivise pollution. We should stop giving taxpayer dollars to multi-billion dollar mining companies and their overseas investors.


• Impose a super profits tax on banks. The big banks make inflated profits thanks to a lack of competition. A tax on those super profits would help compensate Australians for higher fees and charges and would raise up to $5.5 billion per year. This would be much better than the Government's proposed bank deposits tax, which would only raise $500 million per year and which banks say they will pass onto consumers. (This could not happen with a super profits tax, as it is designed to have no direct way for the banks to pass it onto consumers.)


• Reform negative gearing. Reforming tax concessions for negative gearing so they only apply to new housing stock. Australia is one of the few countries to allow negative gearing losses to be offset against all income – and no wonder given that half the benefits flow to the top twenty percent of income earners. It also drives up prices and means home buyers aren't playing on a level playing field with investors. Limiting negative gearing to new housing will encourage new home building (which will create jobs), put downward pressures on rent by increasing the supply of housing, make housing more affordable and raise the Budget up to $3.5 billion per year. Any reforms to negative gearing would be 'grandfathered' in, meaning existing property investors won't have the rug pulled out from under them with any overnight changes to legislation.


• Scrap the capital gains tax discount. Concessions on capital gains tax predominantly benefit the wealthy, who earn a larger proportion of their income from investments, and have also played a role in the housing affordability crisis. More than half of the benefits of this tax discount flow to the wealthiest 10% - yet there's no special 'pay slip' tax discount for everyday workers. Getting rid of the capital gains discount could save about $4 billion per year.


• Introduce a 'Tobin Tax' on high frequency financial transactions. Big investment banks use powerful computers to trade in the financial market at huge volumes. This high frequency trading pushes up share prices for mum and dad investors. A tax of less than half a percent on these big investment banks' transactions would improve market stability and could raise over $1 billion a year.


• Place a duty on wealthy estates. An inheritance duty only on large estates would be an important mechanism to help break generational cycles of inequality, especially at a time when when the income and wealth gaps between the rich and poor is growing fast. Estate duties exist for this reason in most countries, including the United Kingdom and the United States. This could raise up to $5 billion per year.

For more information, you can access the Australia Institute's full report by clicking here.

The Australia Institute's report, 'It's the revenue stupid: Ideas for a brighter budget', was funded by the generous donations of GetUp members. Thanks to all those who made this policy research possible and for stepping up to the difficult task of smarter, fairer tax reform.

You can download the full report through The Australia Institute's website by clicking here. Or simply scroll through the report below: