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“It’s about time that people saw a share of the multibillion-dollar profits from big coal and gas corporations,” he stated, calling on Labor’s first funds to follow the UK mannequin. “Something’s wrong when a nurse pays more tax than a multinational.”
Mr Bandt stated an Australian model of Britain’s transfer could be to scrap the petroleum useful resource hire tax (PRRT) credit. “This alone would bring in an average of over $11 billion a year, more than enough to get dental into Medicare to ease cost of living pressures.”
Equity problem
Dr Henry, who was Treasury secretary between 2001 and 2011 and carried out a serious assessment of the Australian tax system, stated Britain’s tax addressed an “essential inequity issue” given households have been being hit by the identical value shock that was driving a “very small group of businesses to reap windfall profits”.
“It brings into sharp relief that kind of immediate equity issue, particularly when households are under pressure from these increasing prices, of how should the windfall gain be distributed between profits on the one hand and households on the other,” he stated.
“But then there’s a longer term underlying equity issue of an international nature.”
Dr Henry stated he didn’t know if Britain’s determination would lead Australia to revisit an excellent earnings tax of the type he really helpful within the Henry tax assessment in early 2010.
“We missed a big opportunity, and it’s cost us a lot,” he stated.
“These resources should really be thought of as the property of the state and, indeed, the property of future generations.”
He stated the case for changing inefficient state-based royalty regimes with a nationwide tremendous earnings tax was higher than the yet another than 20 years in the past to exchange “our hopeless sales tax system with the GST”.
“One of the ironies here is that our failure to take that opportunity eventually has undermined confidence in the integrity of the system of horizontal fiscal liberalisation that distributes GST revenue to the states.
“So if you miss these opportunities, you set up dynamics that produce further policy problems for you down the track.”
Dr Henry stated one of many macroeconomic advantages of getting a assets tremendous earnings tax was that it may assist act as an financial “shock absorber”.
“That is going to be a consequence of what the UK is doing now,” he stated. “It’s effectively going to play a bit of a macroeconomic role and take some of that pressure out for the UK economy.
Macroeconomic shock absorber
“We could have done it. You’ll recall that at the time in Australia, the government was recycling increases in company tax revenue into households through a succession of personal income tax cuts.”
“The only macroeconomic shock absorber that was operating was this real currency appreciation, which cut into Australia’s domestic competitiveness.
“Even today, the real exchange rate is about 40 per cent where it was pre-mining boom. The way that economists think about his, of course, is that’s equivalent to having imposed a 40 per cent export tax on us.”
That could not trouble assets exporters, who get pleasure from document costs, nevertheless it damages different Australian trade-exposed producers.
“A 40 per cent real appreciation is equivalent to a 40 per cent export tax plus removing a 40 per cent tariff protection for all trade-exposed domestic manufacturers. So, it’s a hell of a big deal.
“The result has been a year-after-year decline in non-business investment to a level last seen in the early 1990s recession. ”
“It’s reversed a long history of capital deepening, you know; more capital per worker. It’s slashed productivity growth and eventually produced very low, perhaps now even negative real wages growth.”
Asked whether or not that is what Treasurer Jim Chalmers should be contemplating, Dr Henry stated: “It may be too late.”
“The general point is that he’s going to have to look at everything that can sensibly be done to lift the rate of productivity growth because that’s the only way he’s going to get higher real wages growth.
“It does seem to me that finding ways of securing a sustained increase in productivity growth is going to require a look at the fundamentals of the tax system and not ruling anything out,” Dr Henry stated.