Moves to alter the tax system in Australia are already underway ahead of the release of a 200-page tax discussion paper.

One of the 66 questions in the paper brings up changes to the GST, which former Liberal leader John Hewson told the ABC had to be changed.

“The government is going to have to own it and drive it, and put a series of policy proposals to the next election,” he said.

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At the Victorian Liberal Party state conference on Saturday Prime Minister Tony Abbott flagged a tax cut for small business in the next budget.

The discussion paper also puts an option for a zero-rate of tax on small business, the Australian Financial Review reports.

The AFR also disclosed a tip-off that a tax on bank deposits would be brought in.

Details on the bank deposits tax were unclear but might raise up to $500 million a year.

And superannuation was due for a shake-up, as the discussion paper said a flat rate of 15 per cent for super contributions disproportionately benefits higher income earners.
It proposed a marginal tax rate on contributions and raised the prospect of charging a tax on super withdrawals.

“Most high-income people receive a higher tax concession, relative to their marginal tax rate, than low-income people” at the 15 per cent rate, the discussion paper said.

“The same is true during the accumulation phase and even more so during the retirement phase when there is no tax on earnings.”

Treasurer Joe Hockey said the tax system needed renewal.

“The problem we face is that our current tax system, which was designed before the 1950s, is ill-suited to the 2050s,” Mr Hockey said.

No changes without support

Mr Hockey insisted there will be no changes to the GST without community and political support.

“We will prosecute a case for change in various areas for tax but ultimately we need to get to a policy outcome,” he told ABC radio on Monday when asked about a possible change in the rate and scope of the GST.

Labor immediately ruled out support for increasing the GST rate from 10 per cent or broadening the base to include fresh food, health and education.

“It’s lazy just to say the only tax reform worth doing is increasing the GST or broadening the base,” shadow treasurer Chris Bowen said.

Greens leader Christine Milne is disappointed the conversation is starting with the “regressive GST” instead of taxing “the bads” of pollution and mining.

“That’s where the big end of town wants to start because it doesn’t want the focus on that fact that it’s not paying its way,” she told Sky News.

The discussion paper will be released Monday.

– with AAP