Subscribe now for unlimited access.
$0/
(min cost $0)
or signup to continue reading
The tax white paper was badly in need of a reset. Like the Black Knight in Monty Python and the Holy Grail, the Treasury was continuing to draft the paper after its arms and legs had been chopped off.
Originally told that nothing was off limits, the Treasury was then told (through the prime minister via the media) that superannuation was off limits, that negative gearing was off limits, and that capital gains tax was off limits.
It had already got the message that mining taxes and carbon taxes were off limits.
With so few arms left to reform the tax system, it would have produced a document that would have not only lacked impact at the time it was released, but that wouldn't have even been filed away for bringing out when the time was right.
When it restarts work it will get a clearer idea of the priorities of the new administration, and it will be able to make it an administration document.
That's what a white paper is: a statement of the goals to be pursued by the administration. (The "green paper" that precedes it is a statement of options. It's green because it's not fully formed).
It is highly likely Malcolm Turnbull will lead by example. There's nothing to stop him making a few quick symbolic changes to the tax system before the white paper process is complete, giving the Treasury and the public an indication of his priorities.
The green paper would be postponed until the first half of next year, and the white paper, with concrete serious options for further tax reform, until after the late 2016 election.
It's easy to guess at the measures that won't be candidates for quick reform.
The goods and services tax can't be changed quickly. It would need the agreement of the states, and it would need a lot of time to persuade the public.
While cutting company tax might be a good idea, it's a difficult case to put before an election, and (as was generally agreed at this week's Australian Financial Review tax summit) it's expensive to do to the extent that would actually make Australia competitive.
The government has already cut the small business rate from 30 per cent to 28.5 per cent. Doing the same for big business would scarcely make any difference in a world where some of Australia's competitors offer tax rates as low as 16 per cent.
By instinct Turnbull would like to cut personal income tax and fund the cuts by removing the "swiss cheese" raft of exemptions and concessions that make the system so complex. He said so, shortly joining Parliament.
But that's very hard work. It can't be done in the next few months.
What can be done, right now, is to blunt superannuation tax concessions. The biggest of them are overwhelmingly directed to high earners, who don't need them to put away for their retirement.
Former NSW treasurer Michael Egan told the tax summit it was a scandal that he and everyone else well advised over 60 paid nothing on their super, thanks to Peter Costello.
"It is the worst thing that any treasurer has ever done in the history of federation," he said. "It is a treasurer's responsibility to protect the revenue, and he didn't."
Action on super, perhaps limiting the absurdly generous amounts high earners can pump into funds each year in order to pay less tax, would raise big dollars straight away. It would show that the new Prime Minister lacked the blindspots of the old one. It would be a downpayment on more complete tax reform when the time comes.
