For some, the name “Ken Henry” is almost synonymous with the term “tax reform”. The former Treasury boss did a major review of the tax system and presented a list of recommendations in 2010, most of which were not implemented by subsequent Coalition and Labor governments.
Now, Henry is back in the media, pitching a mild reform of the notorious pro-landlord tax concessions that cost billions of dollars a year and have worsened housing affordability.
There were some positive reforms in Henry’s tax review — such as raising the tax free threshold, improvements for people on pensions and other welfare payments — but as a whole they were within the framework of neoliberal “reform”.
Negative gearing and capital gains tax discounts on the sale of investment properties held for more than a year cost $8.5 billion in foregone tax revenue in 2021–22, according to the Parliamentary Budget Office (PBO) estimates.
The foregone revenue of these concessions is estimated to blow out to $157 billion over the next decade.
The PBO found, and the Treasury has confirmed, that the benefit of these concessions goes overwhelmingly to the richest 10%.
This is $157 billion that could be spent providing good quality and ecologically sustainable public housing, simultaneously addressing the housing crisis, social justice and the climate crisis.
While Henry proposed a reduction in these gross subsidies to the rich, he is pushing harder for a bigger share of taxes to come from the Goods and Services Tax, a regressive tax that hurts the poorest the most. He also champions lowering the corporate tax rate.
Tax dodging by the rich is taking place on an industrial scale around the world because of numerous concessions and loopholes that governments shamelessly protect.
All around the world, the effective tax rates for the rich have halved since the 1980s, according to Oxfam.
More than $370 billion is estimated to be stashed away in known tax havens by wealthy Australians.
Meanwhile, most people don’t enjoy the concessions and tax dodging opportunities that the rich enjoy.
Ordinary workers celebrating the extra $15 a week they got from Labor’s rework of the Stage 3 tax cuts will soon lose that gain to the combination of cost-of-living increases and bracket creep.
Like so many things under capitalism, the tax system is stacked in favour of the rich.
We are supposed to swallow the idea that if we keep helping the super rich get even richer, the benefits will eventually trickle down to the rest of us.
And pigs will fly.
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