Federal Opposition Leader Bill Shorten (pictured) has firmly rejected Malcolm Turnbull’s proposal to share income tax with the states as a means to fund hospitals and other services.
“I can guarantee Australians a Labor government will not give income tax powers to state and territory governments,” Mr Shorten said.
“Mr Turnbull and his team have been dragged kicking and screaming to put together a bandaid solution for hospitals”.
“It is a bandaid for a bullet hole inflicted by Liberal Party cuts”, Mr Shorten claimed.
Criticism of Mr Turnbull’s radical tax proposal hasn’t been restricted to the Federal Opposition with many tax experts quick to pan the idea.
CPA Australia boss Alex Malley, voiced his concerns regarding Mr Turnbull’s surprising proposal, saying it will create enormous dysfunction in Australia.
“It will create more red tape, more taxes, everything this government says it doesn’t stand for,” Mr Malley said.
Despite Mr Turnbull’s claim that there would be no overall increase in income tax for taxpayers, Mr Malley disagreed suggesting that every state had a ‘different set of circumstances, cost structures and problems’.
“We are struggling to find how this is a sustainable model for the future,” he said.
The Tax Institute has also added its criticism describing it as a “retrograde and flawed” concept. The institute’s president Arthur Athanasiou said he has continually urged governments to shift away from income and inefficient taxes for the bulk of revenues.
“Whilst the proposal may present some theoretical advantage, government time and resources would be far better spent on reforming the present tax system,” Mr Athanasiou said.
Recently National Accounts data released by the Australian Bureau of Statistics revealed that real net disposable income continues to fall. This has its repercussions on other sectors of the economy. Home values are appreciating at five times the rate of wage growth, which makes it increasingly difficult for new aspirants to break into the housing market. To provide a mechanism to taper the housing boom trajectory, while still allowing properties to appreciate in value, will be far more equitable for Australian society as a whole. If, as Malcolm Turnbull claims, fairness is a fundamental criterion of any economic reform, it makes sense that negative gearing needs to be modified. Compelling economic evidence shows that, in its present form, it distorts the housing market, allowing those who own multiple properties to vie in the same playing field as those who are still trying to buy their first home. While leading Australian economists recognise that negative gearing causes real estate dissonance, it will take more than slogans, such as housing values will be “smashed”, to convince the people otherwise.
Annerley Labor 