CDP supports a taxation system which would satisfy the following objectives:

• fund the necessary work and responsibilities of government;
• create an adequate tax base to ensure that the burden of taxation does not fall disproportionately on lower and middle income earners;
• remove the current disincentives for harder work, risk taking and wealth creation;
• remove the current incentives for tax evasion, property speculation, the black economy and the ‘overseas brain drain’.

Personal and Family Taxes

CDP supports a rise in the zero rate tax free threshold so that no one pays tax until they have at least earned their own subsistence.

CDP supports a cut in the top tax rate in order to restore work incentives. As a starting point for determining the top tax rate the CDP believes that the long term aim should be a tax and benefits system where no one faces effective tax rates higher than about 30%.

CDP supports a return to the indexation of tax brackets to stop governments’ profiting from ‘bracket creep’.

CDP supports income splitting for household members related by blood or marriage.

CDP supports deductibility on interest accrued on owner occupied housing. CDP believes that this tax deduction for owner occupied housing should be capped to ensure that the benefit remains with the low or medium income earner.

CDP continues to support retention of capital gain tax exemption on all owner occupied housing.

CDP supports the payment of a home maker allowance for families with young children to prevent both parents having to join the workforce and leaving the care of children to third party carers in their absence.

Savings and Retirement Taxes

CDP supports government consideration of saving-exempt income tax schemes in order to encourage savings.

CDP supports a zero taxation policy on contributions to superannuation and payouts at retirement.

Goods and Services Tax

CDP acknowledges that GST is a regressive tax in the sense that the rate of GST is the same for all taxpayers irrespective of their capacity to pay. The CDP does not support increasing it beyond the current level of 10%.

CDP supports the continued exemption of GST on a basket of essential expenditure items (e.g. basic foodstuffs, housing rent) as these items take up much of the income of a low income earner.

CDP supports the removal of GST on the Federal Fuel Excise component of the cost of fuel.

CDP supports the absence of GST on any compulsory state and federal levies.

Abolition of Taxes

To the extent that GST revenue is distributed to the States, CDP affirms that all State taxes should be abolished.

CDP supports the abolition of taxes that discourage positive economic contribution (for instance, payroll tax should be abolished as it penalises employment initiatives).

CDP affirms that taxation incentives should reward productive forms of economic activity but opposes the availability of tax deductions to speculative scheme with little or no prospect of economic success.

Simplification of the Tax System

Taxation legislation has become so complex and lengthy that it is unintelligible to many people including tax experts. This complexity also means that over 70% of Australians now must use a tax accountant to prepare their annual tax return. Similarly the compliance costs to businesses of both state and federal taxation legislation is an enormous burden to them and a distorter of the economy.

The CDP supports simplification of the taxation system and the adoption of systems seen overseas so that most people never have to fill in a tax return and the compliance burden on businesses is reduced.