30 Sep 11 Preamble - Friday 30 September
Next week sees the Government's Tax Forum convene in Canberra on October 4 and 5. Already the Government is being peppered with suggestions from vested interests about potential tax changes that would suit their constituents.
As the most broadly-representative body for taxation professionals, The Tax Institute has long called for the Government to give a sustained commitment to reform for the benefit of all Australians. This requires a measured and structured approach to reform that includes a timeline and a process for advancing priority issues.
This is why one of the Tax Forum's big legacies should be the creation of an independent body that is solely tasked with examining implementation blueprints for various tax reform options. This Tax Reform Commission would have a membership base reflecting the potential policy impacts on community, individuals, businesses and federal, state and local governments.
The work of such a body would feed directly into government decision-making processes, so that tax reform remains a serious consideration with a clear roadmap for reaching a realistic reform destination. The Commission would consult widely and have a clear remit to conduct modelling and provide advice to government on implementation options across a range of reform priorities (initially emanating from the Tax Forum).
The Henry Review found that much of the existing architecture of our tax system 'reflects sound policy frameworks and Australian social values and will still serve us well', but there are many areas that are crying out for reform.
Taxation revenue collections in Australia are currently greatly dependent on taxes that have an adverse effect on investment and workforce participation. The Henry Review's vision was to concentrate on four robust and efficient broad-based taxes: personal income; business income; economic rents from natural resources and land; and private consumption. Other revenue taxes (mainly State taxes) should be abolished, with more reliance on taxes on rents and consumption, rather than business income.
You can read The Tax Institute's statement of reform priorities here http://www.futuretax.gov.au/content/Content.aspx?doc=TaxForum/Submissions.htm. The statement outlines some of our key tax reform priorities, but is not an exhaustive list. It serves to highlight some of the areas in which we believe the Government must commit to tax reform.
I will be attending the tax forum and debating many more tax reform proposals to improve the tax system in Australia. I look forward to the debate.
Robert Jeremenko FTIA