Dale Boccabella

There has been a release of a discussion paper on priorities and directions for tax reform ahead of the Government’s October Tax Forum.

The tax forum discussion paper provides a useful summary of the main problems facing the tax system, including the transfer system and stamp duty. It also provides a clear direction on what the government wants discussed at the forum.

The forum, to be held on October 4th and 5th 2011 will consider unresolved elements of the wide-ranging report into tax reform produced last year by a panel led by former Treasury Secretary Ken Henry.

Very little harm can come from the government’s October tax forum, but unfortunately, the good to come from it is likely to be marginal – or at best insignificant – because it appears after all, to be just another discussion opportunity for tax experts to chew over the issues.

The government has ruled out overhauling the GST and hasn’t put it on the agenda of the October tax forum. Instead, the forum will look at state taxes such as stamp duty, payroll tax and insurance levies; however some states have now said they are not going to sacrifice their limited taxing powers without compensation.

Some glaringly obvious problems with our tax system are known to everyone attending this forum. I want to see them resolving the treatment of discretionary trusts, the continuation of negative gearing, open-ended exemption for capital gains on homes, the effectual absence of death duties, and the destructiveness of state stamp duties. Alas, it seems not much will be done about it.

The Federal Treasurer Wayne Swan has tabled a discussion paper to guide the forum today, and has made clear it will not revisit tax decisions made in the past year, including the planned mineral resources rent tax, a reduction in corporate tax rates and an increase in the superannuation guarantee from 9 per cent to 12 per cent.

There comes a time when tax experts should stand aside and let political scientists and opinion shapers hammer out the issues. There needs to be a real consensus across political parties that this must be resolved. Consensus builders must ply their skills and work out a way forward.

Associate Professor Dale Boccabella is from the Australian School of Taxation and Business, at UNSW.