The Federal Coalition’s proposed tax policy white paper marks the beginning of a mature political debate on the role of the GST in our tax system. The time for political scaremongering on the GST is over, with the sustainability of Australia’s tax base at stake.
We have long argued the need for a genuine public discussion on reforming Australia’s tax system, which must include the GST. As recent events have shown, our current tax base is dangerously exposed to changes in domestic and international economic circumstances. Australia’s tax base must be robust and capable of withstanding cyclical shifts.
Without reform, our tax system will not be able to provide sufficient revenue to meet the significant spending commitments of the coming years. Worse still, our current tax system continues to hamper economic growth, with State taxes such as stamp duties on homes and insurance duties amongst the most inefficient taxes in the country.
We know that 90% of the entire tax take in Australia is generated by only 10 taxes, with an additional 115 taxes generating the remaining 10% of revenue.
A mature debate on constructing a simplified tax system that supports economic growth and a shift towards more robust revenue streams is essential to safeguard Australia’s future. Such a debate is impossible without considering the role of the GST in replacing current inefficient State taxes and other much-needed reforms.
In other news last week, the Shadow Treasurer, the Hon Joe Hockey MP, gave his Budget Reply speech to the Press Club in Canberra. His focus on improving the ATO-taxpayer relationship is a welcome recognition of tax professionals’ concerns.
The ATO-taxpayer relationship is central to maintaining confidence in the integrity of our tax system. The Shadow Treasurer’s announcement of additional Parliamentary review to focus on the ATO’s operations and organisational structure will supplement the new Commissioner’s ongoing efforts to reform aspects of the ATO’s operations.
Members will recall that the Commissioner recently announced at The Tax Institute's National Convention that an independent review function would be set up within the ATO. The division should address actual or perceived biases in the handling of tax audits and disputes by offering a more independent evaluation process.
We strongly support any initiative that leads to a more open, transparent and productive ATO-taxpayer relationship.
Robert Jeremenko CTA is Senior Tax Counsel of The Tax Institute.
The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.