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Reflections on the ALP's tax package

Publication date: 08 Sep 04 | Source: THE TAX INSTITUTE

'Labor's tax package is a slick product that delivers welfare through the tax system and clear benefits for middle income Australians but it fails to deliver a better, fairer and simpler tax system', said Neil Earle, President, Taxation Institute of Australia.

Like all current tax policies, the proposed tax package does little to address the key concerns of small business - tax red tape and the complexity underlying the tax laws.

'The magic bullet offered by the ALP to solve these small business problems is the so called 'GST ratio method'', noted Mr Earle.

'This is an outdated November 2001 solution, which will do nothing to reduce tax compliance costs,' he said.

'Small businesses will incur more costs to ensure that they are not worse off with this proposed method by comparison with the current treatment'.

'The Taxation Institute of Australia's question is: 'Is this the extent of the ALP's small business Tax Policy - a policy that affects 44.5% of the workforce and 1.1 million separate businesses?'' queried Mr Earle.

'The changes in superannuation, whilst appearing to favour low income earners, can deliver a loss in benefit due to the removal of the co-contribution. Again, the Taxation Institute of Australia calls for a comprehensive policy of superannuation reform that simplifies the superannuation regulatory regime,' Mr Earle continued.

'The Institute also queries the savings measures as it relies on the unjust confiscation of people's superannuation contributions, uncertain results from increased aggressive ATO audit activities and illusory gains arising from the repeal of a number of current tax measures' concluded Neil Earle.

* Australia Bureau of Statistics