Calls for the Abbott government to take the axe to tax concessions to improve the budget bottom line would seem to be a non-starter, at least for the next financial year.
The Australian Council of Social Service has urged the government to address inefficient tax arrangements rather than make spending cuts in the 2015/16 May budget.
The welfare lobby group wants reform of negative gearing, superannuation and capital gains tax concessions, which collectively cost the budget billions of dollars in foregone revenue.
ACOSS boss Cassandra Goldie said this budget needs to be a lot fairer than the last one.
“The way this can be achieved is by seriously targeting wasteful spending at the top end … instead of pursuing policies that shift the burden on to people on the lowest incomes,” she said releasing the group’s 2015/16 budget submission.
Finance Minister Mathias Cormann says everyone will have the opportunity to put forward ideas on how to improve the tax system in this year’s white paper tax review.
But any changes would be taken to the 2016 election.
Furthermore, Senator Cormann said the coalition made a commitment at the last election that it wouldn’t make any unexpected, adverse changes to superannuation tax settings.
“You can’t have government’s continuously chopping and changing these policy settings,” Senator Cormann told Fairfax radio.
“People saving for their retirement need certainty and stability.”
He also rejected an ACOSS proposal to scrap the $6.6 billion private health insurance rebate, saying it is very important all Australians can have timely and affordable access to quality health care.
“The coalition is strongly committed to supporting those Australians who take additional responsibility for their own health care needs,” he told ABC radio.
But he said it is important to get the budget under control so that the nation lives within its means.
The mid-year budget review released just before Christmas showed a marked deterioration in the deficit, partly as a result of a steep drop in commodity prices hitting the nation’s income.
New data on Thursday showed the country’s terms of trade eased further during the December quarter to a near five-year low as import prices outpaced flat exports.
“We expect the terms of trade to slip a little further in early 2015 as commodity prices remain under pressure,” JP Morgan economist Tom Kennedy said.