Article:

Key trends from the last four BDO Tax Reform Surveys

12 February 2015

Lance Cunningham |

Every year, BDO releases a comprehensive Tax Reform Survey, which puts Australia's current tax system under the spotlight. The survey tackles a number of issues with the existing tax framework and asks the country's taxpayers what changes are urgently needed.

With the 2015 survey now available, this article will take a closer look at the trends highlighted in the report and compare them to the results gathered in previous years. Here are some of the most common themes:

Henry Review revisited

The Rudd government initiated the Henry Review in 2008, and the panel released its advice for tax reform two years later. However, only 15 per cent of the 138 recommendations have since been either partially or completely implemented.

BDO's Tax Reform surveys show respondents want the federal government to revisit the Henry Review, with the majority of people supporting this idea as the years pass.

In 2011, 77 per cent of those polled agreed with revisiting the recommendations. This has remained a consistent trend over the years, with more than 75 per cent of people saying the same in subsequent surveys.

GST reforms are essential

There is also consistent, overwhelming support for GST reforms among survey participants. Nearly three-quarters of respondents agreed changes to the sales tax were crucial in the inaugural 2011 BDO report.

In the years since, this proportion has continued to grow, jumping to 87.5 per cent in 2014 and peaking at 90.3 per cent this year. The abolition of GST exemptions to make the system simpler has remained a popular policy, gaining 60, 67 and 66 per cent of the vote in 2013, 2014 and 2015 respectively.

However, there has been growing interest in raising the GST rate in order to remove state payroll taxes and stamp duties. Only 46 per cent supported this idea in 2013, but this jumped to 59 per cent the following year and 71 per cent in 2015.

Taxes hurting foreign investment

Australia's tax system makes the country an unattractive location for companies looking to establish a regional headquarters or invest - and this problem is only getting worse.

A mere 10 per cent of people agreed the Australian tax system promotes the nation as a good place to invest in 2011, but this dropped further to just 4.2 per cent this year.

When respondents were asked whether the country's taxes are competitive with international rivals, similar results were found. While 10 per cent agreed in 2013, this percentage had nearly halved by 2015.

Too many taxes

The sheer number of Australian taxes is a burden for a significant majority of the people surveyed. Furthermore, the percentage of respondents who agree with this statement has remained consistent over the last four years, ranging between 84 and 87.5 per cent.

Of the country's levies, state payroll taxes and stamp duties are among the most criticised. In 2015, nine in 10 participants said they placed a significant burden on companies, while 92.5 per cent agreed last year.

Taxing trusts remains polarising issue

Over the last four years, public opinion towards taxing trusts as companies has been a divisive topic. The idea was rejected by 37 per cent of respondents in 2011, climbing to 40.3 per cent this year.

This is a similar figure to the percentage of people who support the notion (42.2 per cent), while just over 17 per cent are noncommittal. BDO's stance on the matter remains the same; we believe trusts should be taxed as companies on an elective basis.

How survey participants respond to this question in next year's report may well depend on the issues covered in the government's upcoming Tax Reform White Paper.