Ernst & Young Survey Reveals Australia's Business Sector Disillusioned With Tax Reforms

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

03 May 2001

An Ernst & Young survey gauging the opinion of Australia's leading business executives on the country's economy has revealed that the majority of the business sector believes that the tax reforms implemented by the Australian Taxation Office (ATO) and the Treasury have been more of a hindrance than a help, with 62 per cent blaming the tax system for constraining economic growth.

Of those questioned, 46 per cent believed the tax reforms to have been unsuccessful and companies expressed criticism over the government's ability to deliver on its comprehensive business tax reform. 43 per cent said the ATO and the Treasury actually 'obstructed' business taxation reform and 27 per cent considered the departments' influence on tax reform to be 'neutral'.

Ernst & Young tax reform principal John Gonsalves accused both the ATO and the Treasury for acting with their own interests in mind rather than what was best for Australia's businesses. He said business 'had been sold a pup by the Treasury and Tax Office, who said they could do it and, if anything, they're the ones that have probably been found to be inadequate. We've had an independent come in with recommendations, but the implementation has then gone to the very people who we've had all the problems with over the years of putting layer upon layer on the tax system.'

In particular the goods and services tax (GST) which was introduced last year became a point of contention for many respondents with only one in four considering the GST to have been beneficial for the Australian economy.

Although industry organisations last week called for a budget deficit in the belief that it would revitalise the economy, 75 per cent of business leaders said they wanted the government to keep the budget in surplus and to avoid a deficit. Mr Gonsalves said businesses believed it would be bad timing for the government to make a u-turn on its policy of debt reduction and budget surpluses. 'With the forthcoming budget likely to be on the borderline of a surplus or deficit, the same number of executives are now urging the government to keep the budget in the black, an outcome looking less likely as more and more is promised by a government under pressure in the polls,' he said.

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