Last weeks economicroundtableallows TreasurerJim Chalmersto continue his incremental agenda now and radically transform the nation later, asAlan Austinreports.

AN IMPRESSIVE ORCHESTRA of the nations top bureaucrats, academic wizards, corporate chiefs and heads of agencies performed impressively under the baton of maestro Jim Chalmers in Canberra last week. The Economic Reform Roundtable delivered barely a discordant note.

The fact that none of the assembled impresarios riffed solo with any pressing complaint was a strong if unstated endorsement of Labors harmonious economicperformance.

Hair-on-fire panic about productivity was doused. Mendacious moaning about the household recession was muted. The cost of living crisis which IA hasshownended two years ago was forgotten. And patheticattemptsby Coalition figures to trap Labor were dismissed.

In his finalpress conferencelast Friday, Dr Chalmers identified four areas of intended taxation reform. These were (1) a fairer go for workers, including greater intergenerational equality; (2) affordable incentives for business investment; (3) simplifying the system; and (4) ensuring sustainable revenue.

It is now likely the next election campaign will see Labor reprise negative gearing, family trusts and the tax breaks for capital gains, all long-held Labor doctrines abandoned at the last two elections.

While Australias economy faces short-term pressures, its structural strength remains a solid foundation for long-term prosperity.

Lower taxes on workers

An excellent policypaperpresented by theGrattan Institutedemonstrated that Australia currently taxes revenue from wages more heavily than income derived from property and wealth.

This was agreed to be the principal driver of intergenerational inequality, which emerged as a major theme. A nifty graph, accessible on the Instituteswebsite, showed this visually to the gathering. See chart below.

(Source:Grattan Institute)

Clearly, baby boomers, represented in red, with the same incomes as younger generations, shown in yellow, pay much less tax because of the rorts built into the system over the decades.

The Government can now claim support for fixing this.

Beating off the blow-back

Labors challenge henceforward will be to deflect opposition to its revived reform agenda, which will inevitably come. This will be helped by emphasising these six realities.

Point 1. Australia is not comparable to other economies

The population of New South Wales, Queensland, Western Australia, South Australia and the Northern Territory combined is the same as that of the Netherlands. The area is 230 times greater.

Hence, the costs of Australias energy grid, telecommunications and road and rail networks are of a different order of magnitude. Small countries like the Netherlands, Denmark and Switzerland can easily build and maintain nationwide infrastructure with corporate tax rates below 30%. Australia cant.

Point 2. Australias advantages are unmatched

Australians enjoy the highest quality of life in the world with a stable political system, a magnificent climate, great personal liberty and multiple other advantages.

Lamentable reporting by mainstream media hacksis a major reason Australiaranks well downthe global happiness tables.

These are masked, tragically, by Australia having arguably the worst mainstream newsrooms in the developed world, which are hell-bent on undermining reform and which succeed indistortingpopular opinions on the state of the nation.

Point 3. Australia is not a high tax country

Australias overall tax rate is well below that of other nations generally regarded as well-managed. These include Norway, Denmark, the Netherlands, Germany, Canada and New Zealand. See chart, below.

(Data source:OECD)

Australias 29.4% is well below theOECDaverage of 34.0%. Importantly, life in Australia is vastly better than in the eight countries with lower overall taxes.

Point 4. Australian companies are not taxed excessively

The list of officialcorporate taxrates of all 38 OECD members has Australia ranking equal third from the top, which looks punitive. This is deceptive.

Australias tax office takes 30% of corporate profits, as in Germany, Mexico and Costa Rica. Japan imposes 30.62% and Colombia 35%.

What complicates this are the additional imposts for superannuation or social security, or whatever mechanism gets corporations to contribute to employee retirement.

Australian companies contribute only 12%. Businesses in most European countries pay between 20% and 45%. See chart below.

(Data source:Trading Economics)

Australia also offers dividend imputation, which most comparable countries dont and many othertax avoidanceschemes. Allowing for these, Australia ranks closer to the bottom than the top.

There is no valid argument for any change to the current corporate tax rate of 30%.

Point 5: Revenue other than from income tax and GST

The Coalitions refusal to collect excise revenue from the petroleum industry through its last term was one of its costliest failures.

This is now reversing, with both fuel excise and total exciseup substantiallysince Labors election. See chart below.

(Source:Data.gov.au)

Point 6: Greater equality improves the economy for everyone

The bright young lads at the Australia Institute made the case well in last months tax reformpaperthat the Goods and Services Tax (GST) will provide more revenue for the states, now long overdue, simply by shifting income towards the poor:

The Institute argues that extending the GST to private school fees, private health insurance and other expenditure would generate billions more each year from taxpayers who can afford it. In contrast, it claims, raising the GST rate would exacerbate the inequality already caused by the exclusion of so many goods and services preferred by the highest income households.

This is another strategic adjustment Labor can make now under its current strong electoral mandate. There are others.

It is likely maestro Chalmers will present a sonata or two in the near term. The great symphonies, however, must wait until 2028.

Alan Austinis an Independent Australia columnist and freelance journalist. You can follow him@alanaustin001.

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