ALOISI: The Finance Minister is Penny Wong and she joins me now. Good afternoon.
WONG: Good afternoon to you.
ALOISI: The proof will be in the pudding I know, but how can we be sure this was not just a talkfest?
WONG: Perhaps speak to some of the people who were there other than me I think it was a really good forum, it was open, constructive, a high quality debate. It made people think about things and while some of the answers might have differed, people were asking the right questions. What is the best tax system for where we are as a nation, where we are as an economy and where we want to be in the years ahead? I found it very useful and I think there was some useful priorities coming out of it.
ALOISI: So many issues were brought up over the two days and well canvass a few of them in just a moment. But what stood out for you as something which perhaps needs the most urgent attention?
WONG: I think the discussion of state tax reform was pretty instructive. Essentially, we had a situation where everyone agreed that some of the state taxes were inefficient, were regressive and they should be removed. And its a question of how it can be done, how we can make them less problematic.
I thought it was a very good proposal that was picked up by the Treasurer, to get the Treasurer of New South Wales and of Queensland to actually set out a state tax reform plan which might include for example harmonising payroll tax. These sorts of practical reforms and getting the states involved in putting them forward is very important.
ALOISI: The Treasurer did say that state-federal tax reform issue was a very passionate discussion. But he also said it was a very heated discussion concerning business tax reform, between business and unions yesterday. He has announced the setting up of a business working reform group. How will that look at what we can do with our patchwork economy now?
WONG: Good question and thats why the Treasurer has made it clear what the first priority is, which is to look at one of the ways we respond to the patchwork economy and that is looking at options for the treatment of losses.
We want to look at ways you can try and improve the treatment of losses in the tax system so you can encourage companies to be more flexible. Youre right, there was a fair bit of argument around the company tax rate across the board. And I think it was good to have that discussion because people essentially have very different fact bases from which they were proceeding so it was a good thing to have it. This group will look at it in the longer term. But in the immediate term, that is an interim report by next month in November, we want to look at options for treatment of losses.
ALOISI: And also personal income tax; there was a lot of discussion about the inequities in our tax system. And Mr Swan also announced a tripling of the tax-free threshold. What other aspects of personal income tax can we look forward to perhaps seeing some changes?
WONG: Well the one youve just spoken about is a pretty big reform so well focus on that in the immediate term and that will take some time for us to get to that point. In terms of the tripling, we are delivering that through the Clean Energy package as part of the assistance regime.
And what the Treasurer said as our first priority in the personal tax system, we should try and go beyond that. We should try and get it to $21,000. That would be a very significant simplification of the tax system. It would remove over a million taxpayers out of the tax system. Obviously, weve got to fund it so that will have to be worked on down the track. But what it will do is build on the reforms weve already got in place.
Of course what this is all about when you get past the jargon, its about reward for effort. Its about rewarding people for working and if you lift the tax free threshold, it encourages participation. Thats a good thing.
ALOISI: The Treasurer also suggested that we need to look at those loopholes that were brought up over the two days. The loopholes that people can actually get around paying the tax they should be paying. He says we need to make the system fairer and more efficient. But is that just a long term idea that perhaps will fade off into the ether? Or will we see some genuine reform take place?
WONG: I think you can take some heart from what we have done today. Weve changed a number of tax concessions or tax expenditures. One was the Dependent Spouse Tax Offset. So we essentially closed that off in the last Budget because we thought that was not a sensible use of taxpayers money. Weve changed the Fringe Benefits Tax arrangements. So weve already done an amount of work on concessions.
But youre right, I think that was a pretty consistent theme and actually from both sides, from all sides. It wasnt just trade unions saying that, it was something business and academics and the community sector were also saying.
ALOISI: You heard me saying that Rob Oakeshott said hed like to see some changes arising from the Forum coming through before Christmas. Is that pie in the sky?
WONG: I think its a pretty good signal that the Treasurer wants the interim report from this business tax reform group by November so thats a good thing and there are already some changes announced. I mean for example, the Treasurer announced today wed fund a Tax Studies Institute. What that will look at is the simplification and design of the tax system. Thats one of the things that Rob and members of the business community were talking about. We need to get more work done on how we can simplify our tax system.
ALOISI: Alright Senator Wong, thank you for your time.
WONG: Good to be with you again.
ENDS