Australian Budget A Missed Opportunity Say Business Leaders

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

10 May 2007

While the federal Budget announced by Treasurer Peter Costello outlined important spending measures to support key areas of economic reform, it again fell short of outlining a plan for strategic tax reform, particularly in addressing Australia’s growing business tax burden, the country's top CEOs have said.

Responding to the latest budget announcement, Michael Chaney, President of the Business Council of Australia, an association of the CEOs of 100 of Australia’s leading corporations, welcomed targeted tax relief that would assist many on low and middle incomes, but lamented the government's lack of action to improve Australia's business competitiveness.

“We are again disappointed that despite a robust economy, reflected in another surge in business taxes, which have been revised up by a further $6 billion since the 2006–07 Budget and now account for a quarter of all revenues, planning for and investing in a competitive tax system has not been achieved,” Chaney said.

“As our reform standards and the BCA’s federal Budget submission outlined, business tax costs and compliance are still too high.

“We need our tax system – in particular our business tax structures – to remain competitive to provide revenue security over the longer term so governments can continue to offer tax relief and other spending measures such as those announced.

“Unfortunately, again, the Budget does little to advance this key area of economic reform.”

However, the BCA welcomed important spending announcements in key areas, particularly the decision to establish a Higher Education Endowment Fund to provide financing for research infrastructure, and programs aimed at simplifying student funding, better targeting skill priorities and promoting greater flexibility in the tertiary sector.

Commitments to reduce administrative and regulatory burdens and to strengthen governance should support improved tertiary outcomes, the BCA said.

The Association also welcomed the ongoing funding of research and development into low emission technologies, expanded energy efficiency programs, significant funding to develop adaptation measures and the announcement of tax deductibility for carbon sink forests.

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