Former RBA Governor Ian Macfarlane Says It's Time To Overhaul The Tax System And Tax Wealth

Photo by Mike Hewitt/Getty Images

Four years after it was handed down and with Australia’s fiscal position in much worse state than many thought it would be in the 2014/15 tax year, the Henry Tax review feels like such a wasted opportunity for the nation.

It’s a theme that former RBA governor Ian Macfarlane has picked up on in an interview with The Australian this morning.

Macfarlane said that:

The whole tax system needs to be restructured. The political right says we need to tax consumption to broaden the tax base. That’s correct, but if you are going to do that, you should also tax wealth. A tax on inheritance is probably the least painful tax you can levy.

Echoing comments made by Maurice Newman to Business Insider recently, Macfarlane said that income tax needs to be overhauled – particularly the high marginal rates.

“Everyone knows it’s better to have a broad (tax) base and low rates, whereas we have got a ­narrow base and high rates,” he said. “Somehow or other, in order for the long-run sustainability of the country, we have to get a more efficient tax system and a much broader base.”

Macfarlane wondered why the budget had slipped so far, so quick, noting, “it is not as though it has blown out because of a recession”.

“We should be moving more quickly towards a surplus at this time.”

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