Publication date: 20 Oct 20 |
Source: THE TAX INSTITUTE
SYDNEY, 14 October 2020: On the back of a Federal Budget aimed at economic recovery, courageous political leadership is needed if we are to make meaningful economic change in the future, agreed a panel of experts at The Tax Summit: Project Reform.
Andrew Mills, CTA (Life), Director of Tax Policy and Technical at The Tax Institute, said “Microeconomic reform is incredibly important to the future productivity and tax reform is about productivity and a reform that should be undertaken. But it strikes me that the government is still tinkering.”
“It was amusing in one sense to see that the government provided FBT exemption for retraining people – but only if they’re about to be made redundant or redeployed. It’s very narrow,” he said.
“If you really want to get the kind of productivity kick that you’re looking for, you also have to invest in people. And that means investing in training in new areas that they don’t necessarily currently have the skills for. It’s just nuts that kind of training could be subject to FBT in the first place.”
He went on to say that we have not yet had the political wherewithal to take a close look at our tax system and how we could provide a long term solution to what will likely be long-term changes in our economy, brought on by the COVID-19 pandemic.
Paul Abbey, Partner at PwC, said that when we talk about our medium-term fiscal health, economic health and the growth of our economy, the COVID-19 pandemic and its effect would likely define our goals.
“What will come out of COVID-19 is that we will know we need to reinforce the strength of the economy, to deliver people jobs, incomes, income security and housing security. To do those things is going to mean that your reform dynamic is not going to be focused so much on equity or fairness or simplicity, I would suggest your reform dynamic is going to be focused on economic improvement and economic growth,” he said.
Michelle de Niese, Executive Director of the Corporate Tax Association, said “It’s going to take a gutsy politician” to enact that kind of tax reform.
“Political courage is what’s needed. Unfortunately, the policy settings at the moment are at the mercy of ‘fairness’. If we could address those perceptions clearly, I think we’d have a much healthier debate. We should be talking about what services the public expects, what they cost, and work towards building a system that can generate that amount of money to ensure those services are available. To have this kind of discussion would be a wonderful outcome.”
Looking to the next Federal Budget, set to be announced in May 2021, de Niese said, “I look at it like the 2020 Rescue Budget and the 2021 Reform Budget. There are two levers that can be pulled there. The question is whether they have the courage to go further than just a rescue package and embark on reform. We’re all hopeful of that, the question is whether it will happen or not.”
This discussion took place in a Focus session of The Tax Summit: Project Reform, an ambitious series of events, leading to a Virtual Summit in November, through which The Tax Institute is building a case for change in our tax system.
For more information, please contact:
Kelly Emmerton – Media Contact, The Tax Institute
02 8223 0029
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