Sarah Martin The Australian 24 Sept 2016
Social Services Minister Christian Porter has flagged replacing family welfare payments with direct tax breaks when technology improves, saying the current system has “deep structural inefficiencies” that must be addressed.
Mr Porter said there were “hundreds of thousands” of families paying about $12,000 in tax each year, who were then receiving the same amount back in family tax benefits.
“You can imagine that that is an extremely inefficient and costly system to, in effect, draw money from one group through tax to give it straight back to them, with all of the administrative costs and loss that occurs in moving that money through government back to the pockets of the people from whom you took it in the first place,” he told Sky News’ Australian Agenda.
“So there are quite deep structural inefficiencies in the system that has kind of grown in an ad hoc way.”
Mr Porter, who last week outlined the framework for a major overhaul of the welfare sector, said that giving direct tax breaks to families was preferable to a system of family tax benefit payments.
“The Family Tax Benefit System, when it was designed in its present form by John Howard and Peter Costello, had always envisaged tax credits rather than direct transfer welfare payments, but for a variety of reasons that didn’t occur at the time,” he said
“Allowing people to keep more of their own money, rather than taking money off them, washing it through government with all of the expense and administrative burden that that takes and then giving it back to them, the first situation of letting them keep more of their own money is far preferable.”
He said technological limitations at the time the FTB payments were introduced had been one of the reasons for the system’s structure, but this could soon be addressed when the Australian Taxation Office moved to a single touch payroll system in 2019-2020.
“We will have certain junctures in the future that are available to try to sort through some of these very long standing, very inefficient problems and do it in a way that actually advantages recipients of welfare payments rather than disadvantages them.”
Original article here