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Tax reform is very much on the agenda, despite the PM backing away from a GST increase. Many experts point to the tax concessions enjoyed by wealthy Australians as a good place to start. Keri Phillips reports.

In Australia, the federal government raises most of its money through three kinds of taxes—personal income tax, company tax and the GST—while the states also raise smaller amounts through things like insurance taxes and stamp duties on buying property. Although the states raise less money, they're responsible for the lion's share of spending, which leads to a perpetual tussle between the two levels of government over money.

We've heard a lot of talk about tax reform recently, but what exactly is the problem? Essentially, the government is spending more than it takes in and that shortfall was exacerbated by the GFC. The mining boom ended and both company tax and GST earnings contracted as consumers started spending less and saving more. So the government wants to find more money, but changes to the tax system can be a political hot potato—as we can see from the heat in the recent debate over increasing the GST.

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