Times change, sadly politicians haven’t: Robert Simeon
We would all love a dollar every time the words “tax reform” have been mentioned over the past decade with countless inquiries and white papers presented where no reform ever eventuated.
So it was most interesting to see Prime Minister Malcolm Turnbull and freshly appointed Treasurer Scott Morrison flagging tax reform, income tax cuts and housing affordability again, much like that broken record of their many predecessors.
Yes the Australian economy has its fair share of problems much like the rest of the developed countries across the planet where the common problem is that they are their own worst enemies. The last major tax reform in Australia was the introduction of the GST back in 2000 where 15 years on the taxes and duties that were promised to be removed still remain in place. So it should come as no surprise that the NSW Premier Mike Baird is leading the debate on the GST being increased to 15 per cent.
Back in February 2015 I wrote about abolishing payroll tax to kick start the economy, so high on Malcolm Turnbull’s to – do list should be the abolition of payroll tax on the basis that each business then injects into their business over the next financial year the amount previously paid in payroll tax.
At last month’s Australian Financial Review Tax Reform Summit Malcolm Turnbull effectively put superannuation tax, negative gearing and capital gains tax concessions back on the discussion table. Respected economist Saul Eslake referred to Australia’s tax system as being a “giant Swiss cheese” riddled with holes that allow the wealthy to pay less tax through minimisation strategies. Based on those observations we can expect an intense debate in coming months where previous governments chose to side – step these issues as they were too contentious. We also need to bear in mind that we are approximately twelve months out from a federal election – so how will such a debate go down with voters?
Current Australian Bureau of Statistics projections have the Australian population growing at approximately 4 million people per decade, which places Australia with the fastest rate of population growth in the developed world. Sydney and Melbourne can expect an additional 100,000 new arrivals annually for the next 40 years which in itself requires massive planning although this may further explain the recent Federal portfolio announcement creating the Cities and Built Environment portfolio.
So now Australia’s tax reform discussion has begun in earnest although given the sheer magnitude that explains why this debate has been deferred for decades. Prior to the next Federal Election we can expect to be inundated with discussion groups and scare campaigns although nothing will really happen (if we do get tax reform) until the 2019 Federal Election given such reforms take years to plan then execute.
In the meantime if we are looking for clues we should note with interest that Scott Morrison has just appointed Phil Gaetjens as his chief of staff which should not be too much of a challenge as he was Peter Costello’s chief of staff from 1997 to 2007. Yes one of the key architects for the GST introduction 15 years ago so it really doesn’t require much joining of the dots to see what picture will appear on the canvas.
Although this time around if there is to be any reform the Australian voters will demand that the states and territories commit to honoring their word when it comes to removing taxes and duties in lieu of increasing the GST to 15 per cent. Somehow many are of the opinion that the states and territories will never agree to take payroll tax and stamp duties from their respective cash registers.
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The tax reform debate really needs to start at Commonwealth Heads of Government Meeting and wouldn’t you love to be a fly on the wall when the Prime Minister and Treasurer outline their bold tax reform agendas.
In NSW we are witnessing the amalgamation of councils because the state government is not happy with them, believing amalgamation will lead to more developments (land tax and stamp duties) – which it certainly will. So with Australia’s biggest ever tax reform finally now plated up on the table they might as well look at the three – tier – governments too.
Make that two as the council amalgamations have already been decided – just not announced.
MOSMAN – 2088
• Number of houses on the market this time last year – 61
• Number of houses on the market last week – 51
• Number of houses on the market this week – 48
• Number of apartments on the market this time last year – 41
• Number of apartments on the market last week – 52
• Number of apartments on the market this week – 60
CREMORNE – 2090
• Number of houses on the market this time last year – 8
• Number of houses on the market last week – 5
• Number of houses on the market this week – 7
• Number of apartments on the market this time last year – 19
• Number of apartments on the market last week – 21
• Number of apartments on the market this week – 23
NEUTRAL BAY – 2089
• Number of houses on the market this time last year – 5
• Number of houses on the market last week – 7
•Number of houses on the market this week – 9
• Number of apartments on the market this time last year– 43
• Number of apartments on the market last week – 28
• Number of apartments on the market this week – 21
ROBERT SIMEON is a director of Richardson Wrench Mosman and Neutral Bay and has been selling residential real estate in Sydney since 1985.
He has also been writing real estate blog Virtual Realty News since 2000.
