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Australian Firms Seek Stability From Budget

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

10 March 2015


The Business Council of Australia has said that Budget 2015 should make no ad hoc tax changes. It said any reforms should be considered in the context of the comprehensive Tax White Paper process.

In its pre-Budget submission, the BCA argues that higher taxes are not the answer to deficit reduction.

It estimated that "bracket creep," where income tax brackets are not adjusted in line with inflation, will see the average tax rate for a taxpayer on average full-time earnings increase from 23 percent to 28 percent. In today's terms, that equates to more than AUD3,000 (USD2,290) in additional tax. However, "relying on bracket creep to fix an ongoing fiscal gap of three percent of gross domestic product (GDP) and return to a surplus of one percent of GDP could take two decades," the BCA warns.

"Imposing ever higher taxes, by decision or stealth, to pay for wasteful or ineffective government spending would exacerbate disincentives to work, save, and invest, and undermine the income growth that ultimately must pay for future public spending, and not address the source of the problem," the submission states.

According to the BCA, the Government's Tax White Paper process should be used "to rebalance the tax mix to encourage investment and innovation while supporting efficient and equitable revenue collection." The BCA urges the Government to put everything on the table, including options for reforming the goods and services tax (GST), such as broadening its base and increasing the rate.

Any taxation reforms recommended in the review should be implemented from Budgets 2016-17 onwards, the BCA says.

TAGS: Budgets | tax | investment | gross domestic product (GDP) | goods and services tax (GST) | Australia | tax rates | tax reform | trade association | trade | individual income tax | services

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