Federal Member for Hume Angus Taylor says any changes to the tax system should encourage more activity, more investment and more jobs.

Speaking in parliament this week, Mr Taylor said tax reform should be good for everyone.

“If you’ve got your tax system really going, it can encourage people to participate in the workforce, businesses to get out there and make investment and entrepreneurs to pursue ideas and bring those to market. You can encourage all of that if you get this right,” he said.

“The reality of tax is that it inherently discourages activity. If you tax income, it discourages people from generating income. If you tax savings, it discourages people from saving. If you tax payroll, it discourages people from employing. Now, we know a certain amount of taxation is a necessary evil, because we have to fund our schools, our hospitals, our roads, our national security and so on. But we should do everything we can with our tax system to discourage activity as little as possible.

“What we don’t want to do in tax reform is make taxes unnecessarily higher and make government bigger, when we otherwise don’t have to. The risk with a GST increase is that we raise all of this money and a big slice of that goes in compensation to those affected by a higher GST and another big slice goes off to the states – and in doing so, we’ve just created bigger government and discouraged activity. I’ve been saying that for quite some time.

“One of the things that’s happening now is that companies and people are becoming much more mobile. Many of us buy things from overseas, often online, we can certainly price things from all over the world and we’re more mobile now. It’s very hard then for governments to be able to collect the money they need, in a world where everything is moving. That’s why we have to think differently about tax and we have to look broadly.

“In any tax system, there are things you can do that don’t involve a trade-off, there are some things you can do that just make the tax system work better, without any really cost at all and as a government we should be constantly looking for those opportunities.”

Angus Taylor speaking in parliament >>