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Stop policy making on the run!

Publication date: 07 Jul 99 | Source: THE TAX INSTITUTE

The Taxation Institute of Australia is very concerned about policy making by the Government on the run in respect of Capital Gains Tax (CGT) reform, particularly given that the Ralph Committee which is considering aspects of CGT reform is yet to report to the Government, according to Taxation Institute of Australia President, Mr Gordon Cooper.

"Even if a crude rate cut or an exemption or concession for certain assets are perceived to be solutions they are yet to be fully evaluated", Mr Cooper said.

"The 'hot chook'GST free debacle should be enough to persuade all parties not to develop policy on the run. Well considered CGT reform is what is needed not a lame duck", he said.

Mr Cooper said that it was well known that disincentives to risk taking exist under the current capital gains regime.

"The potential spillovers from R & D and other high risk activities, and the high cost of capital for small high-technology firms are all important matters that a reform to the capital gains tax regime could help to alleviate," he said.

"However, so far the suggested solutions have all focussed upon narrow aspects of CGT reform rather than much needed comprehensive reform."

" A better solution may be the adoption of more flexible rules for allowing access to capital losses, or making entities a conduit for capital losses. These measures combined with a lower corporate tax rate would provide the basis for Australias emerging high technology industries to successfully raise capital and exploit Australian ideas in Australia."