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Hey big Spender: teal MP wants consumption tax re-think
Independent MP Allegra Spender represents the country's richest electorate but believes the tax system unfairly advantages wealthier Australians over working people.
Australia should look at increasing consumption taxes like the GST and reducing tax concessions, while cutting income tax, to tackle intergenerational inequality, she told the National Press Club on Wednesday.
Ms Spender, who lives in the seat of Wentworth in Sydney's well-heeled eastern suburbs, said governments of all stripes had failed young Australians, who were increasingly bearing a larger tax burden.
"People are fed-up with band-aids and short-termism - designed to distract from the inescapable truth that these problems are far greater than we like to think - and much harder to solve than we want to believe."
Ms Spender, who holds an economics degree from Cambridge, has long argued the need for genuine tax reform, which has for years been left untouched by both major parties despite a landmark tax review in 2010 calling for sweeping changes.
The system was too reliant on income taxes, which are disproportionably paid by young people, while wealthy Australians benefit from concessions.
"Young people are earning less, worth less and taxed more than older, wealthier people," she said.
"The current cost-of-living crisis exacerbates this because it has affected profoundly those people renting or with big mortgages and low savings.
"These are wicked problems and politics as usual has failed to solve them."
To make up for lower income taxes, Ms Spender called for an increase to consumption taxes and a wide-ranging re-examination of the GST, which is due to be reviewed by the Productivity Commission by the end of 2026.
Housing is another main driver behind intergenerational inequality, Ms Spender said.
Contrasting with teal counterparts like Monique Ryan and Zoe Daniel, who have criticised the Victorian government over its plans to increase density, Ms Spender welcomed zoning reform to make housing more affordable.
"My community in Sydney is I think one of the densest electorates in the country ... and it works so well," she said.
"It's a vibrant and really, really strong community. So we can build density that really, really works.
"We need to build across the board: in regions, in our suburbs, but also inner cities."
She also wanted to abolish stamp duty on home purchases - an "awful" tax which "penalises people who move home, downsize or divorce" - but was against changing negative gearing or the capital gains tax discount before housing supply was back where it needs to be.
Ms Spender promised to release a taxation green paper before the next federal election, due by May.
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This Tax Green Paper represents the culmination of this work. It doesn’t tell us what we should or shouldn’t do, instead it seeks to outline challenges as well as the current evidence base to provoke discussion about the solutions. The paper identifies a possible process for significant tax reform in the next parliament. I invite your feedback on this work. Download my Tax Green Paper here
Teal MP details top tax reform priorities in green paper
Allegra Spender has released her review of Australia’s tax system, calling for sweeping changes to address inequality and boost productivity.
Independent MP Allegra Spender has outlined her case for depoliticised, sweeping tax reform in a much-anticipated green paper, calling for lower income and business taxes, fewer concessions for property investors and a reduction in compliance costs.
The member for Wentworth said the tax system was a barrier to home ownership and burdening young Australians – a trend that was only set to worsen due to bracket creep and an ageing population.
“Tax reform has never been more urgent,” Spender said.
“When I started this green paper process 18 months ago tax reform was off the table, with both major parties so scared of tax that their biggest commitment was to do ‘absolutely nothing’.”
“Now tax reform is finally in the frame. Not because either of the major parties have shown real courage, but because economic reality is setting the agenda.”
The green paper, released last week, identified six areas of tax reform to respond to challenges facing younger workers, Australia’s declining productivity levels and the energy transition.
These included lower income taxes on working Australians, cutting tax concessions that favoured investment in existing dwellings rather than home ownership, and incentivising innovation and business investment to increase productivity and economic growth.
Spender said investment allowances, accelerated depreciation, lower tax rates and raising the turnover threshold of $50 million for the 25 per cent company tax rate were all options on the table to ensure corporate taxes maximised productive investment.
The paper also discussed the compliance costs of payroll taxes, fringe benefits tax (FBT) and interactions with the ATO impeded productivity.
“There would be substantial savings if states and territories adopted common definitions, even if there was no change in the total amount of [payroll] tax paid,” it said.
“Given the potential productivity gains available, any federal-state compacts on tax reform could include incentives or conditions for states to align their payroll tax systems.
It also advocated for a rebalancing of tax settings to stabilise the revenue base with changes to demographics and consumption patterns, as well as supporting the energy transition through increasing taxes on the production of fossil fuels and reducing fuel tax concessions.
Finally, Spender said institutional reform, including a Tax Reform Commission, would be needed to “continually review the effectiveness of the system rather than letting the problems slowly amass until they are seemingly insurmountable”.
The Tax Institute backed Spender’s call for a depoliticised tax reform debate.
“It's time to stick to the facts, not the fear many election campaigns rely on. The fact is, our tax system is not sustainable. It’s time to focus on our future,” Tax Institute CEO Scott Treatt said.
“If the lives and future of our children are not the call to action needed, what is?”
The Australian Council of Social Service, which participated in the roundtables Spender organised for the green paper, said tax reform was essential to properly fund services and income support for people in need.
“Our unfair tax system is driving inequality in Australian society, increasing economic insecurity and social division,” said CEO Cassandra Goldie.
“We support the call for the next federal government to use its authority, resources and political capital to build consensus on tax reform early in its term.”
“It is imperative that the paper’s core priorities are part of that reform agenda to ensure that people and businesses pay tax according to their capacity
ACOSS statement in response to Ms Allegra Spender MP’s Tax Green Paper, November 2024
