Peter Costello says Joe Hockey is going about tax reform all wrong

Peter Costello in 2007. Bradley Kanaris/Getty Images

Former Liberal federal treasurer Peter Costello sees the Abbott government’s pledge for “lower, simpler, fairer” taxes as some kind of “morbid joke”.

In his world, Costello says, fairer taxes means lower taxes.

He was commenting on reports Treasury wants to cut franking credits to raise tax on Australian investors including superannuation funds.

Costello also points to think-tanks such as the Australia Institute and the Grattan Institute proposing higher taxes on property investment and capital gains.

“The government does have a tax problem,” he writes in News Corp newspapers today.

“It is that there has been no adjustment to the tax thresholds for five years. Inflation is taking every Australian into higher average tax rates.”

Without change at next month’s budget, the forward estimates will go out to 2019. And that would mean nine years of bracket creep.

“To get action, the government needs to restart the conversation about getting taxes down, not up,” Costello writes.

Hockey said he wished he had the tax revenue the former treasurer had.

“Everyone’s entitled to give free advice and frankly, that’s what it’s worth – it’s free advice,” he told Sky News. “I would suggest that people stop looking back to what it was and focus on the challenges of today and tomorrow, no matter who they are.”

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