INCREASING capital gains tax, tightening the rules around family trusts and removing the health insurance extras rebate are among a range of measures the Australian Council of Social Service says would improve the upcoming Federal Budget bottom line by $5.75 billion.
ACOSS has put forward nine proposals, contained in a discussion paper released on Monday, targeting "tax loopholes" and "wasteful spending".
It calls for "bold action" to target poorly targeted spending which would be better directed at essential services.
The paper suggests increasing capital gains tax by 20% and removing additional tax breaks for small businesses would achieve a budget saving of $1.1 billion.
A further $1 billion could be saved by tightening the tax treatment of private trusts.
Removing these "tax shelters" would save $3.3 billion in the 2014-14 budget, ACOSS predicts.
In terms of "waste", ACOSS claims its changes would achieve $2.45 billion in budget savings.Its changes to the health insurance rebate would save $1.25 billion.
Placing a cap on education expenses, removing the medical expenses tax offset, limiting the seniors tax offset to those on a social security pension - or "people who need it" - and increasing the tax rate on termination payments, not including redundancy payments, would each save $300 million.
ACOSS CEO Dr Cassandra Goldie said the recommendations were in line with those contained in the Henry Tax Review.
She conceded many of the proposals would not be popular, but said they were necessary to make Australia's tax and social security system "fairer, more efficient and more sustainable".
"ACOSS accepts our nation faces a challenge to strengthen the fiscal base if we are to fund important programs we all want, such as adequate income support payments for people living below the poverty line, the National Disability Insurance System, better education and health outcomes and more affordable housing," Dr Goldie said.
"It's unfair that public subsidies for services such as the private health rebate for ancillary health care and the tax rebate for medical expenses go disproportionately to people on the highest incomes while people on low incomes avoid visiting the dentist because they can't afford to.
"Valuable public dollars should be targeted to assist people who need it the most, not people who have less need for government support."
Dr Goldie said the savings could be used to fund "urgent measures" like raising the Newstart unemployment payment by $50 a week for single people.
IN THE CROSSHAIRS
The areas ACOSS says should be targeted to curb income tax avoidance:
- The use of private "discretionary" trusts
- Capital gains income from sale of assets such as property and shares
- International companies reducing tax paid in Australia
- Churning income through super accounts to avoid taxes on wages
The areas ACOSS says should be targeted to tackle "wasteful" spending programs and tax breaks:
- Health insurance rebate for ancillary or 'extras' cover not related to hospital care
- The 20% tax-break for medical 'gap fees' exceeding $2060 a year
- Senior Australians and Pensioners Tax Offset
- Deduction for education expenses
- Non superannuation termination payments
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