The tax-free threshold will be lifted, the (GST) for goods and services will be raised to 15%, and every dollar earned by Australians will be taxed by the government, an ambitious tax reform that shocked Australians as soon as it was announced.
PricewaterhouseCoopers (PricewaterhouseCoopers) (PricewaterhouseCoopers) announced a radical tax reform plan that revealed that 90 percent of Australia`s taxes come from just 10 federal and state taxes.
With UBS economists predicting that the federal budget will return to surplus by 2019-20, PricewaterhouseCoopers believes this is the best time for change Australia to pay taxes.
In a video posted on PricewaterhouseCoopers` website, Paul Abby (Paul Abbey), a tax partner at PricewaterhouseCoopers, said our understanding of tax reform is that the best time for reform is a surplus period.
"We have come to such a moment that we should not just sit on the surplus, not just pay back the debt, we should also consider investing. To improve the tax system. "
According to PricewaterhouseCoopers, Australia has more than 125 taxes at the state and federal levels, but 90 percent of all taxes come from 10 taxes.
"Australia is one of the world`s highest income tax countries, but it is one of the lowest indirect taxes in the world," commercial and financial commentator Switzer (Peter Switzer) told the Daily Mail.
Switzer said the only way to lower corporate and income taxes is to get taxes from indirect sources-the GST-- which is the driving force for reform.
One of the most provocative changes in the proposed reforms is the removal of the tax-free threshold, which many believe is impossible, Mr. Sweitzer said.
Under PricewaterhouseCoopers` plan, every dollar earned by Australians would be taxed after the $20,000 tax-free threshold was lifted, but the taxes would be redistributed to finance low-income people.
The change will prevent high-income earners-earning more than one hundred thousand yuan a year-from benefiting from the tax-free threshold and paying benefits to those in need.
Switzer explained that the government must provide some sort of annuity or subsidy to low-income groups.
The second key point in the proposed plan is to increase GST from 10% to 15%.
"New Zealand`s GST is 15 percent, and some accounting purists think we should raise the majority of GST to 15 percent and provide exemptions for very few goods and services," Switzer said. This will bring a lot of money and allow the government to introduce large-scale tax cuts. "
Another key tax change identified in the plan is the introduction of land tax instead of stamp duty.
People are more afraid of land taxes than stamp taxes-until they buy a house, says Mr Switzer. "it`s a little shocking that we don`t have a land tax in our country."
PricewaterhouseCoopers also proposed abolishing a large tax band and replacing it with an increase in the tax rate for every $1000 increase in revenue.
While some financial advisers have thumbs up on the proposed plan, others question what politicians can turn into reality.
But Abby said these ideas are the beginning of the debate, designed to move beyond frame thinking and challenge some of the fundamentals of the current system.
Some proposed tax changes
- Cancel the tax exemption threshold of 18200 yuan
- Every dollar of income has to be taxed
- Remove large tax bands
- Basic tax rate for every $1000 increase in income, tax rate increases by 0.2%
- Expanding the tax base of GST
- Increase GST to 15%
- Introduction of death tax
- Replace stamp duty with land tax
- A fixed tax rate of 30% on all savings
- Termination of capital gains tax discount
