Taxation reform crucial in creating more dynamic economy
The Productivity Commission has recommended abolishing stamp duty on property purchases, introducing road user charges, and rethinking dividend imputation credits.
Abolishing stamp duty on property purchases, introducing road user charges as electric vehicles become more popular, and rethinking dividend imputation credits are among recommendations in the Productivity Commission’s five-yearly report.
The commission said “ongoing reform of taxation” was crucial in creating a more dynamic economy, noting that based on the annual total tax take of $600bn, even a 0.1 percentage point reduction in the tax burden would add $600m to the economy.
It said “Australia’s taxation settings have a key influence on productivity”, and saving and investment decisions “can be distorted due to the varying tax treatment of different savings options, gaps between the corporate tax rate and marginal personal income tax rates, and differential tax rates for large and small companies”.
“By taxing some activities at higher rates than others, the system can skew incentives and economic activity away from more productive activities,” the report says.
The report adds that property stamp duties have a chilling effect on mobility, and “one effect of (dividend) imputation is to heighten the ‘home country bias’ of domestic investors, including superannuation funds”.
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