Costello On The Warpath Again

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

08 October 2007

Attack is the best form of defence, and with Australian business unhappy about the Howard government's support for the country's competitiveness, Treasurer Peter Costello has challenged Labor to tell Australians what it intends to do with its tax policy ahead of the election.

Labor has said it will set up an expenditure review committee within the first six months if elected this year, but will not spell out any specific plans having identified areas where savings could be made.

"Just weeks out from a federal election, Labor has been unable to say anything about its tax policy. When it was asked what its tax rates would be, shadow treasurer Mr (Wayne) Swan said it would be written on a piece of paper, that's all he could confirm," Mr Costello said in Melbourne. "If you can't tell the Australian people what you intend to do with tax then you can't assure them as to their household budgets and you can't assure them that any of your promises can be funded or implemented."

But when Costello announced budget measures in May that were blatantly populist, the country's top CEOs said the budget fell short of outlining a plan for strategic tax reform, particularly in addressing Australia’s growing business tax burden,.

Responding to the 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.”

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