ACCI Calls For Major Tax Reform In Government Submission

by Mary Swire, Tax-News.com, Hong Kong

27 October 2008

The Australian Chamber of Commerce and Industry (ACCI) is calling for major tax reforms to strengthen the Australian economy and provide economic stimulus in the wake of the global financial downturn.

The ACCI’s plea comes in a submission to the Henry Tax Review, which claims to be the most comprehensive look at the country’s tax system in fifty years.

According to the ACCI, businesses have named taxation and government charges as a major constraint on investment, particularly for small and medium-sized enterprises.

Included in the submission is a possible solution to some of the complex taxation issues surrounding the design of the proposed Carbon Pollution Reduction Scheme. It also addresses the need for a more effective relationship between the tax and welfare systems in order to encourage workforce participation.

“The world economic slowdown adds to the urgency for Australian businesses to improve their productivity, maintain investment and provide job opportunities. This requires a competitive tax system that creates incentive and rewards entrepreneurship,” the ACCI stated.

Specific proposals in the ACCI submission include:

• reducing personal taxes (gradually reducing the top marginal tax rate to 30%);
• indexing tax thresholds (abolishing bracket creep);
• reducing capital gains tax by introducing a stepped rate regime where tax payable declines the longer an asset is held;
• abolishing payroll tax;
• tackling complexity and compliance costs (especially important for small business); and
• reducing high effective marginal tax rates on low and middle income earners.

The announcement is due to be presented to both the Henry Tax review and the Australian Government’s Small Business Summit on Friday.

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