07 Oct 1111 Preamble - Friday 7 October 2011
The Government's Tax Forum convened in Canberra this week. Over two days, I represented The Tax Institute in discussions based around the broad subject areas of business tax, state taxes, environmental and social taxes, personal tax, transfer system and tax system governance.
Discussions at the forum ranged from ‘soap-box’ speeches to thoughtful policy-based insights, but at the end of it all, at least there was a two day long public discussion about tax reform, which is something that happens very rarely.
Following the forum, we are continuing to urge the Federal Government to establish an independent Tax Reform Commission. The proposal was part of our submission to the Forum and was raised repeatedly on the floor during discussions. While we appreciate current budget constraints, we urge the Government to demonstrate ongoing commitment to the vision provided by the Henry Review and lay out a clear blueprint for reform. A broadly-constituted, Tax Reform Commission, taking its initial lead from the policy priorities identified in the Forum would fill this role.
The Commission ought to have a clear remit to consult widely on reform proposals, commission research, conduct modelling and provide advice to all levels of government in relation to implementation of reform proposals. It should draw a range of members with varying expertise from the community and business sectors as well as from the three tiers of government. It would ensure the momentum of reform continues and delivers a roadmap for the way forward.
We welcome the Government’s commitment to progressing business tax reform by announcing the formation of the Business Tax Reform Working Group. This group will examine matters like loss carry back, uplifting losses and what happens to the value of losses when businesses change composition or ownership. It will also assess longer term company tax options, including questions of if and how an equity allowance could work. We are also encouraged by the Government’s $1 million per year commitment to fund a tax research centre for excellence. This commitment is a positive step towards furthering necessary tax research.
With regard to State taxes, there was broad consensus on the need for harmonisation, which will be progressed at a State level. However, focus on harmonisation is a lazy option that’s no substitute for abolition of these inefficient imposts that are currently impeding investment and growth. Therefore, we will continue to push for both discussion about the GST and reform of inefficient state taxes. Meaningful discussion of the GST was still the glaring omission from the Forum.
On governance, there was a re-announcement of the Government’s plan to establish a Tax System Advisory Board, but it will now be chaired independently. This is a positive move that addresses our arguments put during consultation on this measure earlier this year, but we await further details of this ATO oversight board.
Please feel free to be in touch with me to discuss any of the above in further detail.
Robert Jeremenko FTIA