In regard to Christian Kerr’s piece on the National Party’s views
on tax reform (Crikey, yesterday). Far be it from me to intrude on your cheap shot on the
Nationals’ perpetual desire to pork barrel for the bush, but there is actually a
compelling argument for reform of the zonal tax rebate system. The fact is that
such a system already exists, but it has been untouched for so long that it has
developed significant anomalies which makes it ripe for reform. The boundaries
certainly need modifying so it only goes to those who genuinely live in remote
or very remote areas. This should also exclude people on fly-in, fly-out
employment arrangements to such areas.

As with other aspects of the tax system, the Democrats
also believe zonal tax rebates would benefit from being regularly indexed. It
has been very disappointing that in all the talk about options for tax reform
that indexation, including addressing bracket creep, has rarely got a mention.
The continual emphasis in the “debate” on the “need” to provide a massive
windfall for high income earners has become very transparent. If we are
genuinely wanting tax reform to benefit the broader community, it is hard to see
how reducing the top income tax rate could possibly be seen as a higher priority
for structural reform of the tax system than things like fixing bracket creep,
reducing poverty traps (or high effective marginal tax rates) for low-middle
income earners.

Still I suppose when we have a tax reform “debate”
where something as blatantly inequitable and distorting of housing prices as our
negative gearing regime is seen as a no go zone, one shouldn’t be surprised.
Reviewing the way charities are exempted from tax is another that seems to be in
the too hard basket, despite the mega-millions in foregone revenue involved with
very little assessment of how this cost compares with the resulting benefits to
the community.

Without wanting to
give it the kiss of death, I should also mention
that another reform the Nationals were reportedly in favour of is one the
Democrats pushed at the last election – making tax returns optional for ordinary
wage earners with no other significant income sources. This would make a big
saving on administration costs for the ATO and could be tied in with a review of
what deductions can be claimed to provide a bit more simplicity.