The federal government is facing renewed calls to wind back the stage three tax cuts, increase the GST and reduce super tax concessions amid concerns about the revenue outlook.
Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
Key independent politicians including ACT senator David Pocock and Kooyong MP Monique Ryan have joined with the Greens and the Australia Institute think tank in urging the government to dump or scale back the $320 billion income tax change to come into effect in July next year, with Greens senator Barbara Pocock warning the cuts will "put inequality into hyperdrive".
They made their call after the Organisation for Economic Cooperation and Development said the government should raise more revenue by increasing the GST and making bigger cuts to superannuation tax concessions.
In its latest assessment of the Australian economy, the OECD said the nation faced a sustained period of subdued growth that would push the unemployment rate up to 4.4 per cent in 2025.
The international think tank said Australia's public debt had risen significantly since 2010 and spending on health, disability and aged care was mounting and would cost an an extra 21 billion a year by 2040.
"Tax and spending reforms are needed ... to rebuild fiscal buffers and offset the ... costs of population ageing," the OECD said.
"Revenue should be raised by reducing exemptions in the goods and services tax and consideration should be given to raising the rate."
It also recommended "further reducing tax concessions on private pensions".
The federal government has so far rebuffed calls to change the stage three tax cuts or the GST.
It has shown no interest in further tax reform this term beyond minor changes it has made to reduce petroleum and resource rent tax breaks, to cut tax concessions for superannuation balances of $3 million or more and tighten tax rules for multinationals.
A spokesperson for Treasurer Jim Chalmers said the government was undertaking "meaningful reforms" to the tax system.
The spokesperson said the changes to multinational taxation, PRRT reforms and cutting tax breaks for large super balances amounted to a "significant legislative agenda we are delivering".
"We've demonstrated a willingness and ability to make difficult decisions to put the budget on a more sustainable footing [including] meaningful tax changes," the spokesperson said.
But ACT senator Pocock chastised the government for "the weakest possible response" to the need to increase the taxpayer's share of the wealth gained from extracting the nation's mineral resources.
"We have got to benefit more from our own resources," the senator said. "We have been going through a mining boom and all we have got to show for it is a trillion dollars of debt."
READ MORE:
Ms Ryan said there needed to be wholesale tax reform with "everything on the table".
"We need bold action," she said, and called on the government to alter the stage three tax cuts by retaining the 37 per cent tax bracket.
Ms Ryan said this change would free up an extra $8 billion a year that could be spent on more social housing and increased rent assistance.
Australia Institute chief economist Greg Jericho said the stage three cuts were "the most expensive and most inequitable tax cuts in Australia's history".
Mr Jericho said Parliamentary Budget Office analysis showed 72 per cent of the stage three tax cuts would go to the richest 20 per cent of taxpayers.
While acknowledging it was politically unfeasible for the government to scrap the cuts, he said they could be amended to deliver bigger tax cuts to those on less than $125,000 a year while saving up to $130 billion over the first 10 years.
Under four different scenarios modelled by the institute, "the government would be able to provide tax cuts while also having enough money left over to lift the level of JobSeeker to that of the age pension", he said.