Publication date: 05 Aug 98 |
Source: THE TAX INSTITUTE
The Taxation Institute of Australia today warned the Federal Government that a piecemeal
approach to tax reform will not be successful in reforming Australia's complex and confusing
"Tax reform is not synonymous with GST," said Taxation Institute of Australia president,
Mr Ken Spence.
"Our tax system as a whole is in a very perilous state, yet the general obsession with just one
aspect of tax reform - GST - threatens to take politicians' focus away the bigger picture,"
"Tax reform is not just about a GST, although reforming our indirect tax system is very important.
Nor is tax reform just about adjusting individual tax rates, by reforming tax rates and removing
welfare blackholes - though again that is important."
"Tax reform is about looking at our tax system as a whole, and designing a new system
which will allow us to properly compete in the global economy. Payroll taxes, capital gains
tax, FBT and our international tax system - just to pick a few - greatly disadvantage Australian businesses, and therefore jobs," Mr Spence said.
For example, shareholders in an Australian company with foreign operations currently face an
effective total tax rate of over 71%, due to the inflexibility of the Australian tax system. If that
company had instead confined its operations to Australia, its shareholders would face a
maximum total tax rate of 48.5%.
"Australian companies have already started to relocate offshore, as a direct result of our tax
system," Mr Spence said.
"We need to act NOW, to ensure that Australian business and Australian opportunities remain
here, operating under a world class tax system well-suited to the global marketplace," he said.
The Taxation Institute urges all Australians to look past simplistic supermarket trolly GST
thinking in relation to tax reform - and to look at the bigger picture.