Australian Business Calls For Thorough Review Of Tax Regime

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

12 April 2005

Business lobby group, the Business Council of Australia has called upon the government to undertake an immediate and comprehensive review of the nation’s tax system, warning that high rates and a growing level of complexity and red tape are threatening to stifle national competitiveness and stymie economic growth.

“As with business, economies are in competition with each other. Governments cannot be wedded to tax structures without considering their effect on their economy’s competitiveness internationally,” observed Hugh Morgan, BCA‘s Tax Action Plan President.

“Our analysis demonstrates that in a number of tax areas, we are not competitive and it is impacting upon issues that go to the continuing success of Australia’s economy,” he added.

Mr Morgan went on to argue that comprehensive debate was needed on radical root and branch reforms to the Australian tax system.

Under the BCA’s major proposals, the Commonwealth-State tax and state business taxes would be overhauled, as would personal income tax, which would be levied at a single low rate of 30% for high income earners, thus bringing it into line with corporate income tax.

The group is also urging a general review of the personal income tax system, which would culminate in the reduction of effective marginal tax rates and an improved tax environment for saving.

These changes would be carried out in conjunction with a “comprehensive” simplification of the tax administration and compliance systems, paring back the 9,600 page Tax Act which has increased from 3,600 pages in 1996.

The BCA has called upon the government to implement the first changes by the 2006/2007 budget in order to stave off “immediate threats to...competitiveness.”

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