World Vision CEO Says Australian Death Tax Should Be Introduced To Increase Charitable Giving

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There are about 100,000 Australians that are considered super rich and who would feel the effects on a new death tax that is being proposed which if introduced would raise $5 billion a year in revenue for the government according to Tim Costello, chairman of the Community Council for Australia. There are plenty of countries such as the United Kingdom and United Stated which impose inheritance taxes. The idea of such a tax is to claw back some of the money that rich people are bequeathing younger generations and use some of the proceeds for charitable donations.

Tackle growing income inequality

The OECD says such a tax is a good idea however there is one major problem associated which such a tax and that is rich people may start to transfer their wealth to younger generations before they die. However Mr. Costello who is also CEO of World Vision said that just because some people may seek to evade the tax, it is no reason not to implement it. Australia is suffering from growing income inequality and those baby boomers who had benefited from free tertiary education and tax breaks on superannuation now control about 40 per cent of Australia’s wealth.

Super rich should get hit

Mr. Costello says it is estimated that 100,000 Australians are worth more than $5 million whilst a quarter of those people have a net worth exceeding $10 million. This would mean that if just 4 per cent paid an estate tax of 35 per cent, it would generate around $5 billion a year in annual revenue. The threshold of $5 million would be applicable to less than 1 per cent of the country’s population. He added that if a death tax were to be introduced, people who donated their assets to charity would be exempt.

Australia out of sync

Many countries impose inheritance taxes. Mr. Costello estimates that an additional $100 million could be donated to charity if a death tax were introduced.

“Charitable giving in Australia from the rich is low compared to Britain and America, If people donated part of their inheritance to charity that portion could be tax-free.” Mr. Costello said

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