OECD report a wake-up call on inequality and revenue levels

The key take away from the OECD report is that Australia’s tax system is not adequately addressing Australia’s rising inequality or revenue challenges.

“The OECD says Australia does poorly when it comes to inequality. Reducing income tax or company tax rates would only serve to exacerbate this inequality. Expanding the GST would hurt poorer people; but if done selectively, broadening the GST on exempt services such as private school fees and private health insurance could help reduce inequality,” said Matt Grudnoff, senior economist at the Australia Institute.

“Taxing wealth more fairly would both address inequality and any possible future revenue challenges.

“The OECD has also made concrete suggestions on how to reduce inequality by reducing tax concessions on capital gains and superannuation mainly used by the wealthy, and increasing unemployment payments that are currently some of the lowest in the OECD.

“If Australia is to reduce inequality, then the last thing it should be doing is cutting taxes for high income earners, like it is planning to do with its stage 3 tax cuts.

“The OECD also praised the Australian Government for its big COVID stimulus package that helped Australia weather the economic downturn better than most developed countries in 2020.”