Australian Tax Board Hints At Reform

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

12 June 2003

According to reports this week, Australia's Board of Taxation has revealed that it is undertaking a scoping review aimed at simplifying the nation's complex tax code.

The decision has been welcomed by business interests and other lobby groups, who argue that the introduction of GST has greatly complicated the tax code when it was designed to do just the opposite. This is certainly the conclusion reached by the national director of Taxpayers Australia, Peter McDonald.

"It's so complex now, in fact, it's worse than it ever was. If you think back to when we had the introduction of GST and it was going to make everything simpler, it actually didn't do that at all. It did the exact opposite," McDonald complained to The Ageon Wednesday.

Academics currently working on an Australian Research Council-funded study investigating the implications of a change in the tax code for small business concur. According to their calculations, small firms paid an average of $5,442 in additional tax-related expenses during the transitional phase of the new tax.

Professor John Glover of Monash University's law faculty, who is working on the report, said that there is no doubt that small firms are worse off as a result of GST. "I'm talking about costs; I'm talking about bottom line; I'm talking about the number of hours in a month or a year a small business proprietor has to devote to meeting his taxation responsibilities," The Age quoted Glover as observing.

However, both the Board of Taxation's chairman, Dick Warburton and the government are keeping tight lipped on the issue of reform, although some lawmakers were at least prepared to support the idea ot tax simplification. Revenue Minister, Senator Helen Coonan, said recently that "any simplification of the tax acts that can reasonably be achieved is to be encouraged," although she tempered this remark by adding: "While I support the scoping exercise being undertaken it would be premature to speculate on the outcome of the board's deliberations."

Meanwhile, McDonald, who supports the idea of a fundamental shake-up and simplification of the tax system, was very pessimistic on the chances of significant change actually taking place. When asked by The Age on the chances of reform in the near future, he replied simply "none".

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