It is almost a decade since the release of Australia’s Future Tax System Review.
Known now as the Henry Review after its lead investigator, then head of Treasury Ken Henry, this major analysis was commissioned by the then Labor Government to “examine and make recommendations to create a tax structure that will position Australia to deal with the demographic, social, economic and environmental challenges of the 21st century and enhance Australia’s economic and social outcomes”.
The Terms of Reference were broad and bold, notwithstanding the exclusion of consideration of the Goods and Services Tax (GST).
The Review’s primary recommendation was that
“[R]evenue raising should be concentrated on four robust and efficient broad-based taxes:
- personal income, assessed on a more comprehensive base;
- business income, designed to support economic growth;
- economic rents from natural resources and land; and
- private consumption.”
On any objective assessment of Australia’s current taxation system, the third of these four categories remains the one in which successive governments have proved unwilling or incapable of implementing adequate taxation measures.
In an address to the Australian Institute of Company Directors’ Governance Summit in Melbourne last year, Henry lamented the failure of successive governments to act on the report’s recommendations, warning that, without comprehensive reform leading to a sustainable tax base, the work of government would grind to a halt.
It’s well past time for our political leaders to grasp the mettle of structural reform to deliver a sustainable tax base to support the wellbeing and future prosperity of the Australian people.
Per Capita believes that a critical part of such reform is the implementation of efficient and effective taxation on our natural resources, including our oil and gas reserves.