If we taxed land properly, we'd have billions of extra dollars to fund big tax cuts elsewhere. So why don't we do it?
ABCIt's a basic principle of tax design. Professor Garnaut said if you added up all of the opportunities for economic reform to reduce economic rents in Australia's economy, or to tax them efficiently and equitably, you'd have a "transformational economic reform program." To explain what they mean, they say Australia's states and territories could raise an extra $27 billion in tax revenue each year, without reducing investment or economic growth, if they were smarter about land taxation. When combined with income taxation, those high taper rates produce "extraordinarily high" effective marginal tax rates for struggling workers, which can create "poverty traps" for people on low incomes. "In total, if all states achieved best-in-class taxation of land they would raise an additional $27 billion in revenue each year, without reducing investment or growth," Dr Helm and Dr Murray say.
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