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Australian Tax Crisis Looming, Says Henry

by Mary Swire,, Hong Kong

18 March 2014

Australia is facing an imminent fiscal crisis, which will require that the Government undertake a comprehensive reform of its tax and transfer systems, former Treasury secretary Dr Ken Henry has said.

Speaking at an event organized by the Australian National University, Henry admitted that there had previously been no urgent case for introducing the changes he recommended in his 2010 review. The review, which took 18 months to complete, was intended to lay the foundations for a 10-year plan for reform.

As Kenny explained to attendees, his report covered all elements of the tax system and payments transfer system as well, but not GST as it was considered too vital a source of revenue to be touched. He said that Australia is "getting closer to the point that we can say the crisis is imminent because so little progress has been made in addressing the challenges."

He recommended that the Coalition Government, which won September's general election, re-examine the report's proposals. He said he plans to write an updated report, which will look at GST measures in particular. He described changes to the GST as inescapable, and told the ABC's 730 program that it is just a matter of time until the GST rate is increased.

Prime Minister Tony Abbott's ministry is dealing with a backlog of 92 announced but unlegislated tax and superannuation measures. It will proceed with 34, amend a further three, and axe the remaining 55. Abbott has also pledged that his administration will draw up a tax reform white paper within the next two years.

TAGS: VAT rates | tax | business | value added tax (VAT) | tax incentives | VAT legislation | goods and services tax (GST) | Australia | legislation | tax reform | services

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