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'Remove Exemptions to GST' says Watchdog

Publication date: 18 Mar 01 | Source: THE TAX INSTITUTE

Exemptions to the GST should be removed across the board if issues of complexity and unfairness with the tax are to be resolved, the President of the Taxation Institute of Australia, Mr Ray Conwell, said today.

'The GST should be a broad-based tax and that means very few exemptions and provisos,' Mr Conwell said.

'This is what we recommended in 1998 and this is what we'll continue to recommend.'

Mr Conwell points to a submission made by the Tax Institute to the Gibson Committee in February 1998 that urged the government to adopt a 'broad-based consumption tax at a rate of 10 per cent.'

'GST needs to be free from substantial exemptions. The complexity with GST is more a result of exemptions than issues with Business Activity Statements', according to Mr Conwell.

Mr Conwell's comments are in response to repeated 'cries for help' from the Tax Institute's membership base, which is representative of both large 'big-five' accounting firms, tax lawyers and suburban and regional practices.

The Tax Institute currently has 11,000 members practising in all areas of tax.

'Our membership base is diverse but all of our members report their clients are sending the same message - please explain,' Mr Conwell says.

Mr Conwell says the most common complaint from the members is that clients don't understand the complexity and unfairness in the new tax system. He says members, in particular smaller practitioners who have access to fewer resources and less funding and time for professional development, are also 'grappling' to make sense of it for their clients.

'The bottom line is that in 2001 there is enormous complexity and unfairness in the new tax system. Not surprising when the new tax system has added 2,000,000 words of legislation running to five massive volumes and comprising 90 bills,' Mr Conwell says.

Mr Conwell also says fewer GST exceptions would mean greater fairness.

'Equally sharing the tax burden across all sectors of the economy will help ensure the tax rate remains the same. Exemptions reduce GST revenue and this can only be compensated by increasing the tax rate,' he said.