Federal Budget 2016 – an election platform that has stifled true reform
‘It’s not just another Budget’ announced Scott Morrison in the handing down of his first Budget under the Turnbull Government. While the intention suggests that the Budget is more of an economic plan for jobs and growth, the rhetoric clearly points to an election manifesto that is dressed up as a Budget as the Government looks ahead to the double dissolution on 2 July.
For those who were optimistic that the 2016 Budget might begin the process of genuine tax reform, it’s disappointing that the political agenda has reduced it to more tinkering at the edges. This is very much a Budget from a Government whose first, second and third priorities are to get re-elected.
More than a decade and a half since our tax system has seen any meaningful reform, it’s frustrating that the election platform has stifled the chances of anything significant occurring in the near future to truly fix the complexities of our tax system.
The most fundamental and wide reaching tax reforms in this Budget relate to the superannuation system. The amendments here range from those that will be universally welcomed (such as the removal of the ‘substantially self-employed’ test for individual tax deductions), to those that are fair in the context of the system (the $1.6 million pension assets test), to those that will cause a massive reassessment of when to retire for some taxpayers (the capping of concessional contributions to $25,000 and non-concessional contributions to $500,000 – backdated to 2007).
The Government’s commitment to reduce the corporate tax rate over the next ten years is welcome. But in reality, this glide path from 30% to 25% is open to hijacking by political or economic expediency at any point on the descent.
The Budget allows the Government to begin the election campaign by saying it has staked out the taxation high ground – but without any evidence of fundamental, system wide reform.
So, while it is ‘Not another Budget’ – it is also another opportunity lost for real reform.
Download the Federal Budget 2016 report.
Download the Chinese Summary.