The tax points Henry misses

The Henry Review aims to develop the best possible tax-and-transfer policy for Australian big capital. But there are other proposals that would make up a tax-and-transfer policy for the working-class majority.

The Rudd government has already ruled out action on 27 of the Henry review’s 138 recommendations.

This is mainly because many of these would be political poison — such as requiring parents to work when their child turns four, introducing land tax on the family home and restricting rent assistance for families. Further measures included reducing indexation of the aged pension above a certain threshold, removing pensioner and low-income transport concessions and asking the states to charge market rents for public housing.

All of these would be very unpopular with working people.

But there are many other ways of raising revenue that Henry doesn’t even mention, or mentions only in passing.

Henry does not include the Robin Hood Tax – a small tax on banks, hedge funds and other finance institutions that would raise billions. When levied on transactions such as foreign exchange, derivatives trading and share deals, it can raise hundreds of billions of dollars.

Henry barely mentions the possibility of bequest duty (inheritance tax), yet Australia is one of the few countries without such a tax.

What about extending the super profits tax to other industries? In the week Henry’s review was released, the Big Four Australian banks racked up total net profits of $14 billion for the last half-year.

Nor does the review propose removing subsidies to the rich. These include: the capital gains 50% tax reduction concession, which benefits those who hold wealth in the form of capital and negative gearing. This concession favours people on the highest marginal tax rates.

Subsidies to Australia’s big polluters should be cut. These amount to about $9 billion annually, the same as the anticipated revenue from the RSPT in 2012-13.

Further revenue could be made from a serious offensive against business tax evasion. Through a litany of scams, 40% of large companies pay no company tax at all. And many companies pay at rates well below 30%.

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