Covid-19 has exposed the weaknesses in the Australian tax system: Tax reform will be required for recovery

Vol: 
10/2020
Author name: 
Sainsbury, T
Breunig, R
Year: 
2020
Month: 
August
Abstract: 

The economic shock and government response to COVID-19 highlight weaknesses in Australia’s tax system. COVID-19 puts pressure on a system under strain from long-term structural forces and the tax-free and tax-reduced status of certain sources of income. Returning to a sound structural budget position cannot be accomplished through passive action that relies on ‘natural’ revenue growth from current tax sources. Discussions should focus on comprehensive reform. Reducing reliance on income (particularly labour) taxes and applying a more equal tax treatment to different individuals and income sources over time are priorities which will support improved well-being and labour market activity.

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