NAB calls for tax cuts to help younger Australians

A big four bank chief executive has weighed in on the tax system which he says punishes younger workers, calling for Treasurer Jim Chalmers to broaden the base to take the pressure off them.

In a submission to the Productivity Commission Five Pillars inquiry, NAB chief executive Andrew Irvine called for the country to modernise the tax system.

“The aim should be to broaden the tax base, attract investment, reduce the reliance on income tax, and identify taxes which produce unfavourable economic outcomes,” he said.

NAB’s submission forms part of the Productivity Commission’s five inquiries to identify priority reforms under their five pillar productivity growth agenda.

In excerpts of NABs submission, which is yet to be published, Mr Irvine says the current tax system is adding to the intergenerational inequity, meaning young Aussies are carrying the tax burden.

“For the past 100 years, generation after generation of children have enjoyed a better life than their parents based on population growth, participation and productivity,” Mr Irvine said.

“But productivity has plateaued and our quality of life and ability to compete on a global stage are at risk.”

NAB’s submission follows figures released on Thursday by the Parliamentary Budget Office forecasts a 90 per cent rise in personal income tax collection to $682bn over the next 10 years, compared with $357.8bn paid today.

Personal income tax is forecast to reach 47.7 per cent of the total government revenue this year, but will rise to 53 per cent over the next decade.

It shows younger, poorer Australians will be asked to carry the tax liability as businesses remain flat, indirect revenues fall and older Australians avoid bracket creep.

“Older Australians, who are more likely to derive income from savings, investments, and superannuation, benefit disproportionately from lower taxes, while younger and working-age individuals bear a heavier tax burden on their labour,” the report finds.

It also concluded larger tax concessions on savings, particularly super and the capital gains tax discount, disproportionately benefit higher income earners.

The big bank boss said tax reform is key to lifting Australia’s productivity and living standards for younger Australians.

He also called for simplification in Australia’s housing sector to help reduce the price of housing.

“Australia is not building enough homes to guarantee access to housing for all Australians, let alone maintain the dream of home ownership,” he said.

“We need to make it easier and faster to build affordable homes where people want to live.”

Mr Irvine also called for Australia to boost productivity through moving towards renewable energy costs.

“Spiralling energy costs are holding back manufacturing growth. NAB supports the Government’s focus on energy security including the key role of gas in providing firming capacity,” the excerpts say.

“The accelerated rollout of renewables generation, transmission, storage and system services is critical.

“Australia needs stable, reliable and affordable domestic energy, delivered in a way that balances environmental goals with economic and social needs.”