With economic change on the government’s agenda financial experts are calling for the removal of stamp duty, and the introduction of a dual tax system, which could see income from savings and work separated and taxed differently.
The proposal would cover income from superannuation, share dividends, capital gains, and interest earned from bank accounts.
Currently, each savings type is taxed and calculated differently.
According to Breunig, who is also the director of the Tax and Transfer Policy Institute, Australia’s current tax system was complicated and had contradicting goals:
“Some savings tax arrangements are progressive, taxing higher incomes more heavily, and some are regressive. Some favour the old but are punitive for the young.”
“The system is complex and encourages Australians to engage in costly tax planning schemes,” he added.
The report also called for the removal of stamp duty as it “significantly” distorted buying decisions for young families and hurt the property market.
Stamp duty the report said created inefficiencies, and higher costs compared to other taxes in Australia. It also forced people to live further away from work and kept them unable to relocate for better opportunities.
This, in turn, created more congestion, increased unemployment, and reduced productivity.
According to Breunig, reforms would “seem radical.”
“But in reality, the reforms are reasonable and would bring us closer to the optimal tax system Australians deserve and this nation needs,” Breuing said.