Oz Assistant Treasurer Optimistic On Tax Reform
by Mary Swire, Tax-News.com, Hong Kong
28 August 2015
"Tax reform is a key part of the Government's policy agenda to build jobs, growth, and opportunity," Australia's Assistant Treasurer, Josh Frydenberg has said.
At an event organized by The Tax Institute, Frydenberg stressed that the Government "wants to deliver a better tax system that is lower, simpler, and fairer, which is good for the economy and where everyone meets their tax obligations."
The Assistant Treasurer pointed out that Australia is comparatively reliant on personal and corporate income tax revenue and that the compliance and administration costs associated with the country's complex tax system are too high. According to Frydenberg, bracket creep, where individual taxpayers are pushed into higher tax brackets as a result of inflation and rising wages, "reduces the incentive to get ahead." He is concerned that if the Government does nothing, "Australians will increasingly look to take their ideas and skills offshore – where reward for their efforts is higher."
The federal Government has received more than 860 submissions to its "Re:think" Discussion Paper. This document was published as the first stage in the broader Tax White Paper process. The Government will release an options paper later this year that will take into account the views raised in the submissions. The full white paper will be released before the next election.
Frydenberg said it was "especially pleasing" to see Mike Baird, the Premier of Australia's largest state, New South Wales, "leading the debate on the need for tax reform." Baird has proposed an increase in the goods and services (GST) rate to 15 percent to fund health care reforms.
"While changing the GST requires the support of all the states, this shouldn't deter public debate and economic analysis about the merits of further reform. This is why we have not ruled out consideration of the GST during the Tax White Paper process," Frydenberg said. He added that it was "especially encouraging" that federal, state, and territory treasurers had reached an in-principle agreement on the application of GST to low-value goods imported into Australia.
According to Frydenberg, "This shows us that the states and the federal Government can come together to deliver important reform. The challenge for all of us is to maintain this momentum."
Australia's business community has been forthright in expressing the need for tax reform. This week, organizations including the Australian Chamber of Commerce and Industry, the Australian Council of Trade Unions, the Australian Council of Social Service, and the Business Council of Australia participated in a National Reform Summit. The event brought business, union, and community groups together with the aim of reaching consensus on some of the main challenges facing the country.
In a post-Summit statement, participants argued that, when it comes to tax reform, "doing nothing, or tinkering with piecemeal reforms, is not an option." They said that governments should approach tax reform "in an open, inclusive, and transparent way that does not rule out options for reasons of political expediency" and develop a decade-long plan for change.
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