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Australia desperately needs large scale tax reform and should aim to rebalance its tax mix, the Institute of Public Accountants (IPA) has argued.
According to the IPA's pre-Budget submission, the current mix of taxes limits the potential for economic growth and is insufficient to meet government spending commitments. It described the tax base as too narrow, unstable, and uncompetitive.
The IPA noted that the tax mix is heavily weighted toward direct taxes on personal and corporate income and warned that without reform Australia's reliance on income taxes will only continue to increase.
The IPA recommended that the Government:
IPA Chief Executive Officer Andrew Conway commented: "Australia desperately needs large scale tax reform if it is to address the current fiscal issues we face and it's beyond time that the Government delivered on its commitment for a promised tax white paper. We are not advocating for a change in the overall tax burden but rather a change in the mix to deliver a fairer, more effective, internationally competitive and less complex tax system."
He added: "A shift to growth supporting taxes is required to sustain Australia's economic momentum and meet all current and future spending needs. The current taxation mix is insufficient to meet expenditure commitments and Australia faces a revenue funding gap, especially in light of the fall in terms of trade and sluggish national income growth."
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