Plan to give wealthy a tax break

A RADICAL tax plan put to the Government would see more items slugged with GST to give Australia’s wealthiest a tax cut.

Respected think tank the Tax Institute says the measure is needed to prevent a brain drain of Australia’s top talent to overseas countries which have lower income tax rates for their top earners.

Australia’s highest paid people are currently taxed 45c for every dollar earned over $180,000. But this should be slashed to more comparable international rates — down to 33-39 per cent.

The top tax break should be paid for by broadening the GST base and reviewing tax writeoffs and concessions, according to the Tax Institute’s preBudget submission to Treasury.

Tax Institute president Matthew Pawson said Australia’s top income tax rate of almost 50 per cent was excessive compared with other countries, with the US top personal marginal rate at 39.6 per cent and Canada and New Zealand at 33 per cent.

“This is a significant threat to the available talent pool in Australia,” he wrote in the submission. “The top personal marginal tax rate should be in line with the highest rates of comparable jurisdictions.

“We submit that this could potentially be achieved without any detriment to the revenue base primarily through a broadening of the GST base by reviewing the many current exemptions and concessions ...”

It also recommended a review of work-related expense deductions as well as slashing capital gains tax discount from 50 per cent to 25 per cent.

Opposition finance spokesman Jim Chalmers commended capital gains tax reform but rejected the increasing the GST to subsidise high-end tax cuts.

“Giving tax breaks to the top end of town at the expense of middle Australia is the entirely wrong approach to fixing the budget in a fair way,” he said.