Federal Budget 2015
13 May 2015
TAX REFORM STUCK AT THE STATION
In this second Abbott Government Federal Budget, there were no real measures announced that were particularly bold or surprising. While it certainly can’t be described as a ‘derailment’ in terms of tax reform and simplification, the ‘train is still very much stuck at the station’, with the timetable for delivery of the tax White Paper holding back our departure time.
While it was never going to be a ‘full steam ahead’ budget, we know from our annual Tax Reform Survey that the business community believes real tax reform is well overdue. Unfortunately this budget has done little more than to yet again tinker at the edges. That said, while the Australian public may have wished for an ‘express’ approach to real reform, the delay is not unexpected given the Federal Government’s commitment to the Tax White Paper consultation process on our journey to tax reform.
Many of the Budget’s key measures were released ahead of time, making it almost as predictable as the daily commute. While there will be some relief for small business, the tokenistic concessions will offer only slight relief and may in fact add to tax compliance costs. Business with turnover under $2 million have been offered a ‘free ticket to ride’ whereas multinational corporations could be hit with a huge fine if they are caught evading their fares.
This year’s Budget offers very little for the medium business sector. Taxpayers in the medium business sector are a very important part of the Australian economy, and generally they pay more tax than the small business sector, however they seem to have been ignored in this budget. Medium sized businesses could be forgiven for being unsure whether the tax reform journey is going their way.
The Winners and Losers
- Small business
- Rural business
- Northern Australia
- Tax avoiding multi-nationals
- Online consumers
- Foreign Investors
- Fly-in fly-out workers
- Short-term residents
The Government’s Tax Reform ‘train’ is fast running out of track. The upcoming White Paper will undoubtedly be its last opportunity to deliver real tax reform to the Australian public. Serious consideration must be given to previous remedies identified as far back as the Henry Report in 2008.
While Australia still has a long commute before it reaches its White Paper destination, we are full of hope that once the Tax Reform White Paper process is finalised we will be travelling in the right direction. Although it feels that we have been stopped in our tracks, if politics could be set aside for the good of the Australian economy, the Conductor may be able to finally blow the whistle, get all passengers on board, and start the wheels rolling on the rails to proper tax reform.
View the Federal Budget 2015 Chinese analysis.