Tax 2025 - People, the Economy and the Future of Tax

Grant Wardell-Johnson, CTA, is the Lead Tax Partner of the Economics and Tax Centre at KPMG. Grant is a leading thinker not only on the future of the profession, but also on the future state of society.

In this post we take a look back at the paper he delivered at 2017’s Queensland Tax Forum ‘Tax 2025 - People, the Economy and the Future of Tax’, before looking forward to the keynote he will deliver at next month’s Forum, ‘Tax reform and productivity for growth’.

Grant described the paper as “somewhat speculative”, one that “seeks to look forward through the next eight years, to 2025”.

The paper outlines some key points in relation to eight broad topic areas concerning the future, designed to form a foundation or springboard for thought. The topics covered in the paper are:

  • How we choose to enframe the future 
  • The role that technology will play in all, or virtually all, that we do 
  • Our changing values including the role of work and how that will fit within our lives 
  • The changing nature of geopolitics 
  • How our economy is changing shape 
  • What these factors mean for our future tax base 
  • How these elements impact on Revenue Administration 
  • The shape of the future tax function in dealing with these challenges. 

Each of these topics are covered in more detail in the full paper.

Looking at the future tax base, Grant’s paper envisages a future state where:

  • International company tax rates stabilise around 17 percent to 25 percent 
  • Transfer pricing complexity leads to global safe harbours 
  • Consumption tax diminished, potential for transaction taxes 
  • Small scale project or ‘gig’ work from overseas threatens 
  • New withholding taxes such as India’s Equalisation Levy 
  • Increased land taxes, but estate taxes resisted 
  • Increased user-charges rather than increased taxation. 

The paper also looks at the potential administration of tax as it will be in 2025, and speculates on issues including:

  • Smaller developed country Tax Administrations, but more targeted 
  • Larger developing country Tax Administrations, but scatter-gun 
  • Audits with direct access to General Ledgers 
  • Rise of multi-Revenue Authority audits 
  • Large demand for certainty but softer rule of law lines 
  • Drive to simplicity. Only higher value-add tax agents remain 
  • Lower marginal positioning, greater focus on economic gain. 

Finally, Grant covers what the tax function of 2025 might look like, and looks at the:

  • Tax function requiring multiple new skills 
  • Rise of Artificial Intelligence and automation for compliance 
  • Tax function facing multiple judgement dilemmas 
  • High level of tax transparency with intense community focus 
  • Greater number of taxable foreign country touch points 
  • Substantial insights provided by data analytics provide 
  • Rise of tax as a path for broad commercial insights. 

At 2018’s Queensland Tax Forum, Grant delivers the keynote address ‘Tax reform and productivity for growth’.

One of the key themes of the above paper is how the new global environment renders tax reform more critical now than ever.

Grant Wardell-Johnson, CTA

Grant’s keynote will impress that the loss of productivity arising from a 30% company tax rate over the long term cannot be afforded. But there are many other reform opportunities. Appallingly, he notes, the interaction between the transfer and tax systems gives rise to effective marginal tax rates well in excess of 80% that keep many second earners, mostly women, from increasing their hours.

Significant productivity improvements could however be derived from a new cooperative federalism that would tackle state tax reform and harmonisation. In his keynote, Grant will press the need to tackle the black economy and abuse of work-related expense claims, as well as the need to continue to advocate tax simplification.

Find out more about Grant’s keynote and the rest of the program here.

Grant's paper, ‘Tax 2025 - People, the Economy and the Future of Tax’, is available to download here.

Grant Wardell-Johnson, CTA, has a background in providing tax advice relating to international and domestic tax structuring, international cross-border acquisitions and initial public offerings. He has been the lead Tax Partner on many high-profile projects in the Australian and international markets, including the Wesfarmers acquisition of Coles Limited, Macquarie Group consortia acquisitions of Boart Longyear Limited and Dyno Nobel Limited and their subsequent listing on the Australian Securities Exchange.

Grant now leads the thought leadership on tax policy and consultation on new law, including KPMG’s response to base erosion and profit shifting (BEPS) and the OECD Action Plan. He is Co-Chair of the National Tax Liaison Group, an Adviser to the Board of Taxation, a member of the KPMG Global BEPS Steering Group and the KPMG Responsible Tax Group.

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