Estate taxes fairest for Australia - 11 Feb 2016
Tim Costello – the Chair of Community Council for Australia that represents a massive number of charities and not-for-profits – says Scott Morrison should create a death tax.
The ‘estate duty’ tax is something Tim Costello says a huge range of countries including the UK, Germany, Canada, France, Belgium, Italy and many others already use extensively.
He says this would be a much fairer tax than the GST and could create as much as $100 million in new donations going straight to charity whilst providing the Federal Government with at least $5 billion of new much needed revenue.
He says the new tax would only affect the super rich. He says the tax would be a massive boost to the charity sector and would dramatically increase giving. He says in a country that is getting richer and older by the minute, there has never been a better time to create an ‘estate duty’ tax. He also highlights it would help reduce the growing gap between the very rich and poor.
STORY IN FULL: The Federal Government should create an estate duty to give Australia’s super rich many more reasons to bequest money to charities says the Chair of Community Council for Australia (CCA), Tim Costello.
Tim Costello says it is well and truly time for a new estate duty tax (known as a ‘death tax’), to reduce the growing gap between the very rich and poor and to also reduce inherited inequality.
He says these kinds of taxes have been used for years successfully by many countries including the UK, German, Italy, France, Belgium, Canada, the Republic of Ireland and some States in the USA.
Tim Costello highlight at least $100 million in additional donations could be going straight to charity if the Federal Government green lights the idea of ‘estate duties’.
He also points out that over $5 billion of additional much needed money for government revenue would be raised.
CCA CEO, David Crosbie, says Australia is totally out of step with the rest of the world. David Crosbie said, “Inheritance tax in the UK is now at a 35 year high. The so called ‘death duty’ there raises $7 billion for the government. In Belgium, 1.4% of the country’s overall revenue comes straight from a death tax.”
David Crosbie says it is absolutely time for Australia to talk about death and taxes and realise an estate duty is the fairest and the most painless tax to move forward with. He says it would only affect the richest part of the community, after their life is over. Community Council for Australia says this kind of tax is much fairer than an increase in the GST.
Tim Costello said, “It encourages the super rich to give back to the community. We are highlighting that all donations and bequests to charities should be totally exempt from estate duties … so the more you give to charity, the more you help others whilst reducing the tax burden on the estate.”
Community Council for Australia is an independent, non-political member based organisation dedicated to enhancing the work undertaken by charities and not-for-profits across the nation. Membership includes organisations such as Lifeline Australia, Beyondblue, Mission Australia, SANE, Save the Children, the Smith Family, Wesley Mission, World Vision Australia, St. John Ambulance Australia, Charities Aid Foundation and numerous other organisations.
Tim Costello said, “Put simply, if built correctly, this tax could unquestionably help finance social needs in the decades to come. We urge the Federal Treasurer to look at this idea. It is an income option that cannot be ignored. There has never been a stronger case for an inheritance tax.”
“It is estimated that within the next 50 years there will be 9 million Australians aged 65 or older. There will be more wealth to hand down and fewer of us paying income tax. This is a tax that makes total sense in a country getting older and richer.”
ATO figures now suggest around 25,000 Australian families hold assets above $10 million. If just 4% of those families paid 35% in estate duties, it will equate to approximately $5 billion. Tim Costello says the Henry Review supported the idea of inheritance duties because it was a fair progressive tax that could raise 1% of government revenue with no negative impacts on productivity.
David Crosbie says it is extraordinary that at the current time 0.3% of the nation has wealth of over $10 million. He says there are 25,000 families that fit the super rich category and the Federal Government should strongly consider introducing estate duties because it would only impact a small number of very rich Australians.
He highlights the Henry Review has stated that a tax on estates would fit well with Australia’s demographic circumstances over the coming decades. The Henry Tax Review says over the next 20 years the proportion of all household wealth held by older Australians is projected to increase substantially and large asset accumulations will then be passed on to a relatively small number of recipients.
David Crosbie says the former editor of the journal “Taxation”, Mike Truman, says the problem with inheritance tax is that we are not paying enough of it because it is – in principle – a perfect tax. David Crosbie says it is the perfect tax because:
· it raises significant government income (estimates are around $5 billion).
· is very fair – only impacts a small number (unlike a GST).
· reduces inherited inequality and slows down growth in the gap between the very rich and the poor.
· is collected from people who no longer need it at a time when they are liquidating their assets.
· has no negative impact on productivity.
· encourages giving back to the community.
· will grow over time with more and more ageing wealthy Australians.
· most OECD countries have some form of death duty on the super-rich.