An article posted by the Grattan Institute this week is yet another warning that circumstances are positioning us for the re-introduction of death duties. Whilst the average Joe voter in Australia is in complete denial of our nation’s looming financial woes, prominent economists even those leaning left are now trumpeting it and the value of our dollar is manifesting it. The Grattan think tank is mindful of the problem and is proposing something that looks dangerously like an inheritance tax. The institute’s John Daley has harked back to his November 2013 paper “Balancing Budgets – Tough Choices We Need”. In his exploration of dealing with the blow out in pension payments he loosely suggested that Age Pensioners with high value homes could continue to collect the pension and “pay it back” when they sold their house. In the latest article he has gone a little further in suggesting the “Commonwealth would recover the cost from their estate”. That is a foot in the door to death duties.
Death duties / estate taxes / gift duties have not been part of the state or federal tax environment since the late seventies. Some people regard Capital Gains tax as a quasi death duty however in the majority of cases CGT is not triggered on death at all.
More and more commentary is highlighting the extent to which fiscal burdens are being loaded onto younger generations whilst the baby boomers are reaping the rewards. Meanwhile the nation is looking down the barrel of declining economic fortune and several more years at least of political limbo inhibiting reform at federal and state levels. The result of that will be continuing escalation of the budget emergency with death duties an increasingly viable solution to address both that and accumulated intergenerational imbalances.