The Tax Institute today outlined its key priorities for tax reform ahead of the 2012-13 Federal Budget and called on the Government to pursue an ambitious approach to tax reform to provide greater efficiency and certainty for Australian business.
In its pre-budget submission, The Tax Institute outlined the priority reform areas that would help create a more efficient, equitable and simple tax system; encourage savings and economic growth; and position Australia as a more attractive destination for foreign investment.
“The Henry Review set out a vision to better position Australia for the challenges of the next 40 years,” The Tax Institute’s President Ken Schurgott said.
“Now more than three years on it’s time for the Government to build on this root and branch review by developing and implementing a clear national vision for tax reform.”
Mr Schurgott said: “The collection of tax revenue in Australia is too reliant on inefficient, inconsistent and irregular taxes which impede investment, growth and workforce participation. The Henry Review noted that 90% of Australia’s tax revenue is generated by only ten taxes.
“There are 115 taxes that stand in the way of a simpler tax system.”
Mr Schurgott urged the Government not to use global economic uncertainty and the flow-on effects for the Australian economy as an excuse to delay much-needed tax reforms.
“To ensure that Australia is well positioned in the decades ahead, we must do the hard yards now so we have a clear plan for significant reform over the middle term, which can be implemented as the nation’s economic circumstances allow.”
The Tax Institute advised the Federal Government to pursue a number of tax reforms as a priority in 2012-13, including:
- Reform state taxes: The Commonwealth should take the lead and work with the States through the COAG process to abolish the raft of inefficient and inconsistent state taxes such as stamp duties and payroll tax;
- Establish an independent tax body: Establish a new independent body to construct the blueprint for implementing tax reform. A new Tax Reform Commission would develop the Henry Review vision into a detailed, workable and affordable set of reforms;
- Simplify taxation of trusts: Progress legislative reform of taxation of trusts to provide certainty for the many businesses in Australia that operate through trusts;
- Roll out new professional standards regime for financial planners providing tax advice: Ensure the start date for the new regulatory regime for financial planners that provide tax advice is not delayed beyond the announced start date of 1 July, 2012;
- Superannuation contributions: Allow taxpayers greater flexibility when contributing to superannuation and increase superannuation caps to their 2008/09 levels with increases staggered over several years, to help individuals better determine their own savings plan for self-funded retirement; and
- Bolster Treasury resources to enhance industry consultation: The Department of Treasury should be exempt from the Government’s Efficiency Dividend ensuring it is adequately resourced to engage in essential consultation on tax reform.
Mr Schurgott said the Government should ensure reforms are pursued in an open and transparent manner with due regard for the potential regulatory and compliance impact on affected businesses.
“An open and transparent timetable for legislative change gives taxpayers much needed certainty when dealing with change,” Mr Schurgott said, adding that the trend toward announcing retrospective changes to tax law was “extremely concerning”.
The full submission can be downloaded at http://www.taxinstitute.com.au/submissions/2012-13-pre-budget-submission
For more information contact:
- Robert Jeremenko, Senior Tax Counsel, The Tax Institute, 0468 987 300, (02) 8223 0011
- Dylan Malloch, Sefiani Communications Group: 0407 620 613, (02) 8920 0700.