On Wednesday 15 July, the Treasurer, The Hon Joe Hockey MP, gave a speech putting the spotlight firmly back on tax reform. The speech was timely, ahead of next week's Leaders' Summit involving the Prime Minister, and the Premiers and Chief Ministers of the States and Territories, and our very own State Taxes Conference.
The Treasurer noted that a number of States have failed to abolish the inefficient state taxes they had agreed to when the GST was introduced. This point was made in the Institute's submission to the Tax Discussion Paper.
Bracket creep was also noted as an issue that needed to be addressed. This is consistent with the Institute's submission, which calls for a more transparent marginal tax rate system for individuals.
The Treasurer argued the case for continued differential tax treatment of capital versus income, presumably ruling out any changes to the CGT discount as a way of dealing with issues such as negative gearing.
On other significant matters such as broadening the GST, the Treasurer was not as strident. He also steered clear of multinational taxation in his speech, and argued for stability on superannuation.
None of the 800 submissions to the Tax Discussion Paper had argued for the status quo. There now appears to be a public consensus that our tax system needs to be reformed. We look forward to participating in the next step - the Options (Green) Paper process- which should address the how.
Thilini Wickramasuriya FTI is a 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.