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Taxation Institute welcomes Government's response to Mortimer

Publication date: 09 Dec 97 | Source: THE TAX INSTITUTE

Taxation Institute welcomes Government's response to Mortimer.

Yesterday's announcement relating to withholding taxes and the Offshore Banking Unit's will hopefully result in a boost to business carried on in Australia and provide a real incentive for business to locate operations in Australia, according to Taxation Institute of Australia President, Mr Richard Gelski.

Costs should be reduced via the freeing up of the withholding tax requirements on borrowings by Australian taxpayers and the enhancement of the Offshore Banking Unit regime will provide further incentives and reduce potential costs.

"Such measures will obviously have a flow on effect to the Australian economy as more jobs are located in Australia," Mr Gelski said.

"What is now needed, as was recognised in the Mortimer Report and is accepted in he Government's response, is major reform of the Australian taxation system."

"In particular, there is a need to re-orientate the present tax system to make it more 'growth friendly'," he said.

Mr Gelski said that the Government needed to acknowledge that, regardless of the carrots it holds out to overseas firms to locate business here, the complexity of the present tax system will still continue to act as a deterrent to business considering locating in Australia.

"Concessions are not enough in the absence of a workable and effective tax system," he said.

"If businesses believe the advantages of any concessions will be eaten away by the cost of complying with the totality of the tax system there will be no real incentive to invest in Australia."

"The Taxation Institute urges the Government to continue on this commendable path by making some real improvements to the Australian tax system. Complex taxes such as the wholesale sales tax, Fringe Benefits Tax and Capital Gains Tax should be the subject of major reforms."

"Provisions dealing with foreign income of controlled foreign entities are second only to the United States in complexity and scream out for simplification, at least in their application to small business. Such a regime would be truly attractive to businesses wishing to relocate here as well as to existing Australian businesses," he said.