No new taxes to see here, just plenty of ‘loophole closing’

No new taxes to see here, just plenty of ‘loophole closing’

The government is putting a lot of faith in its ability to portray Labor as the party of higher taxes. It had better work, because it’s being used to shut down all sorts of useful ideas that might enable the government to return to surplus sooner than it currently expects. As Arthur Sinodinos, whose job now appears to be Australia’s best-informed political commentator rather than an actual political participant, put it, the decision to declare superannuation tax concessions off limits was purely a political tactic.


As Crikey has previously noted, for all Abbott’s claim to be the leader who offers a lower tax future than Labor, he plans to increase the tax burden on the Australian economy significantly above that imposed by Labor. But the government is now leaving open the possibility  that it will address tax “loopholes”, while maintaining the “no new taxes” fiction.

Loopholes, of course, are in the eye of the beholder. One would assume any tax law outcome that was unintentionally providing a benefit was a “loophole”, but such a description would also describe the extent to which superannuation tax concessions are providing a benefit to high-income earners beyond the policy goal of providing an incentive to save for retirement. And in 2018-19, when the total value of super tax concessions is forecast to become greater than the cost of aged pension, that point would be uncontestably reached.

Treasurer Joe Hockey had a similar approach in the budget, where the government was at pains to show how it wasn’t imposing new taxes, but was taking “tax integrity” measures, like hitting competitors of News Corp with the GST, and vaguely targeting profit-shifting multinationals.

As the Netflix tax example shows, pretty much anything can be dressed up as “tax integrity” or “level playing field” or “loophole” if that’s how you want to portray it. Handily, the dollars generated by closing tax “loopholes” are just as real as those from removing unintended policy benefits and are just as positive for the budget bottom line as actual tax rises. So stand by for more stern commitments from the government to ensure greater integrity in our tax system, level the playing field for plucky little Aussie companies (like News Corp) battling foreign interlopers and remove unfortunate loopholes, many of which will undoubtedly have been the result of Labor’s failure to properly oversee the tax system. None of which will be new taxes or extensions of existing ones, of course.

This article originally appeared on Crikey.


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