Summarize and humanize this content to 2000 words in 6 paragraphs in EnglishWith just over two weeks left in this year’s federal election campaign Opposition Leader Peter Dutton has finally earmarked the potential for major tax reform.’I want to see us move as quickly as we can as a country to changes around personal income tax, including indexation, because bracket creep, as we know, is a killer in the economy,’ he said. Cue applause. What he is talking about, bracket creep, occurs when inflation keeps rising but the tax rates don’t change to account for that, meaning workers are pushed into higher tax brackets.But don’t get too excited just yet.Dutton’s comments are vague and at best present long term potential to do something major on the tax reforming front. In the short to medium term nothing will happen, as Dutton himself admits.His trigger for when it might happen also needs to be better expressed and thought out.The opposition leader says ‘we need to do it at a time where the budget can afford to do so. It would be an aspiration of our government to achieve that because it provides equity in the tax system and it is costly to do so.’If Dutton plans to wait for the budget to be back in surplus, that’s at least a decade away from now. If he’s going to wait for a structural surplus where recurrent spending is down and back under control, the time for indexing income tax rates might never come. Peter Dutton has suggested he would – eventually – address tax bracket creep if elected as Prime Minister on May 3 At least not without embracing an agenda for wider tax reform – of the sort Ken Henry flagged in his tax reform package Kevin Rudd commissioned shortly after Labor won the 2007 election. More than 100 recommendations were made, less than a handful were enacted. Anthony Albanese plucked one more out of the list Henry created when he announced a simplified tax deductions process during his campaign launch last weekend.That’s the low hanging fruit. The more complex and serious reforms Henry recommended haven’t been touched. The former head of Treasury wasn’t even permitted to look at changes to the GST in his tax review, which most economists will tell you are absolutely necessary if we are to get serious about reforming the tax system.So Dutton has earmarked something important and worthwhile, but he’s set up prerequisites before it can be seriously looked at that all but guarantee it never will get looked at.Australia’s reliance on income taxes as part of our broader tax and spend system are disproportionate. We are way too over-reliant on income taxes rather than other forms of tax such as on consumption for example.It means that the tax burden in this country disproportionately falls on those earning incomes. That in years to come will become a generational conflict if something isn’t done about it. Dutton at least seems to realise this.Indexing income tax rates would stop average Australians having their incomes eroded by bracket creep.Making it automatic that they do, as happens with pensions, HECS and welfare payments for example, is fair and good policy – if it can be paid for. One possible way to address Australia’s economic issues would be for less emphasis on taxing wages – while introducing changes to the Goods and Services Tax (GST) That will only happen if wider reforms are enacted to ensure that the indexation doesn’t spiral future budgets into irrecoverable deficits.For many years politicians on both sides of the major party divide have used bracket creep to prop up their budgets. It is used alongside immigration as an artificial driver of economic growth and has become one of the tricks of the trade for Treasurers.If Dutton is serious about a future embrace of indexing income tax rates, he’ll need to also get serious about considering everything from a higher GST, to a broader GST, to adjustments to negative gearing, capital gains taxes and possibly even changes to the tax treatment of superannuation. Dare I say it but a look at inheritance taxes might also need to take place, even if such a change is ultimately discarded.Without a seriously broad look at how we tax, the notion of removing bracket creep from income taxes is a furphy. Just another glib line on the campaign trail.However, if Dutton is serious, win or lose this election he’s earmarked an important next step in the political and policy debate. It is a worthy agenda. Can we have such a serious debate, free from cheap political point scoring and narrow partisan attacks? Probably not, but points to Dutton for at least flagging the potential for it to happen.Even if he only did so for the sake of appearing open to lowering the tax burden Australians face, because in a simplistic sense that’s what Liberal leaders are supposed to do.
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