Aging population occurs in Australia when there is a decline in mortality rates, and high life expectancy, coupled with lower fertility rates. Because of the Covid-19 pandemic, there is concern that Australia’s tax system will not be able to support aging citizens with its smaller population. This is something that might come to be an issue in the near future.
Younger generations don’t feel comfortable having children in wake of the economy and worldwide Covid-19 pandemic. “Australia’s birth rate continues to be below what is considered necessary for the population to replace itself”, demographer Liz Allen explains. Many young people feel uncertain about employment stability, health support, and the economy. These are part of the reason why the fertility rate is dropping. This leaves a smaller economy and the problem of sufficient support for Australia’s aging population.
The government needs to have a look at supporting new families. The latest Intergenerational Report (IGR) was recently released, giving us an insight into how the economy and country will look in forty years’ time. There is fear the country will not be able to support government services with the way the government is currently taxing.
The potential fix is to look at other sources of income to tax. Particularly capital gains tax needs to be revisited to tax Australia’s richest. If distribution of income is looked at, there can be ways to combat this looming issue. It’s important to look at assets, capital gains and investments to tax too so that future Australians won’t have to pay for the pandemic.
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