The Grattan Institute’s new report, Game-changers: Economic reform priorities for Australia, says if Australian governments “are serious about raising rates of economic growth, they must reform the tax mix and increase the workforce participation rates of women and older people”. This could contribute over $70bn per year to economic growth in the next decade, Grattan Institute Chief Executive Officer John Daley said.
The report recommended that Australia should:
- broaden the GST to cover all consumption, especially education, health and food, but reduce income and corporate taxes. The report says the existing GST excludes 40% of consumption, notably education, health and fresh food. It said removing these exemptions would increase GDP by $20bn per year;
- rebalance state and local taxes by reducing transaction taxes and increasing property taxes. However, the economic payoff is much lower, only increasing GDP by about $5bn per year. Stamp duties and a range of other inefficient state taxes should be reduced, while property rates increased. There would be no change in the total tax collected by state and local governments;
- reduce the disincentives to paid work for women with young children by changing benefits;
- increase the age at which people can access their superannuation and the aged pension.
The report said these reforms that could “change the [economic reform] game over the next decade”.
[LTN 110, 8/6]