‘Everything should be on the table’ to ease tax burden on young

“So, that’s a lot of the tax burden on individuals.

“We also know that back in 1980, there were six taxpayers in the workforce for every one person over 65. Right now, there’s four and by 2060, it’s projected that there’s going to be 2.7.”

“So once you start using those sorts of figures, the case for reform becomes quite compelling.”

The call to arms for a serious national effort on a tax overhaul by federal and state governments was backed by Ms Spender, who has initiated a series of tax reform roundtables involving tax experts such as Ken Henry, business and community groups.

“We do have dangerously low productivity,” Ms Spender said.

“And if we don’t do something about that, it will have a material impact on the lives of future Australians and our ability to pay for the things we care about.”

“There’s a lot of concern about intergenerational equity.

“We’re diverging, to be honest, in terms of the experience of different generations and their ability to accumulate wealth. And this is most stark in housing.”

Grattan Institute economist Brendan Coates said wealth inequality, though not income inequality, was widening, particularly between younger and older generations.

The wealthiest 20 per cent of Australians had experienced a 60 per cent wealth increase over the past 20 years, versus a 10 per cent wealth increase for the poorest 20 per cent, he said.

“The intergenerational fiscal bargain is under stress,” he said.

“We haven’t been taxing as much as we could have the unearned income and windfall gains from things like resource rents and land.

“When you’re talking about the intergenerational story, older people are going to have to pay more tax than they are now.

“You can’t have most Australians checking out of the income taxes system aged 60 when people are living beyond the age of 90.”

“That’s what the superannuation tax concessions are doing for many people.”

In a separate briefing in Sydney on Monday, Treasury secretary Steven Kennedy said population ageing is projected to result in a narrowing personal income tax base. “Only 18 per cent of Australians aged 65 and above pay income tax,” he told the Committee for Economic Development of Australia.

‘Nothing should be ruled out’

Treasurer Jim Chalmers is increasing taxes on superannuation earnings for account balances over $3 million, from a headline rate of 15 per cent to 30 per cent, including on paper profits on assets such as property.

He has also spoken of changing taxes in “bite sized chunks”, such as cracking down on multinational tax, bringing forward $600 million a year in revenue from the petroleum resource rent tax and tightening the use of franking credits in connection to off-market share buybacks and capital raisings.

Corporate Tax Association executive director Michelle De Niese said the government needed to move beyond tinkering and develop a tax reform “road map”. She said, “nothing should be ruled out.”

Ms De Niese added corporates should be prepared to consider changes to previous “die in the ditch” issues such as dividend imputation, in exchange for tackling the 30 per cent corporate tax, fringe benefits tax and payroll tax issues that corporates had complained about.

“Everything should be on the table,” she said. “There has to be an absolute agreement that nothing is ruled out.”

The Intergenerational Report in August projected that without reform to the tax system, personal income tax will soar from an-already record 50.5 per cent of federal tax receipts in 2022-23 to 58.4 per cent in 2062-63.

A shift from petrol and diesel vehicles to electric vehicles over the coming decades will cut the fuel excise tax base, while an expected decline in cigarette smoking rates will erode tobacco excise.

Dr Henry warned at the time that increasing income taxes on working-age people via bracket creep would be an “intergenerational tragedy”, as they battled expensive house prices, high government public debt incurred during the pandemic and the effects of climate change.

Dr Henry, who led a landmark review of the tax system in 2009, said the 30 per cent company tax rate should be cut to boost investment, productivity and real wages, and the tax cut be funded by higher taxes on mining profits and land values.