Tax reform must include an overhaul of expenditure and review of GST
26 October 2017
Treasurer Scott Morrison will today present the latest Productivity Commission (PC) report Shifting the Dial: 5 year productivity review to an expected hostile group of State and Territory Treasurers, in an attempt to resurrect tax reform and improve Commonwealth-State relationships.
The report’s tax reform recommendations echo results from a survey conducted by accounting firm BDO earlier this year1, which looked at the reintroduction of a broad tax reform process, abolishment of stamp duties and an increased rate for the Goods and Services Tax (GST) which was discussed a Tax Reform meeting BDO held with the AICD last week.
BDO Corporate Tax Partner, Carlo Moretti, said any real tax reform must include an overhaul of expenditure commitments with a move away from focusing only on raising revenue.
“Our BDO survey found that almost 83% believe the Government should introduce a broad tax reform process that covers both Federal and State taxes and not just tinker around the edges,” Mr Moretti said.
“61% of respondents also said State Governments should abolish stamp duties and other inefficient taxes. This aligns with the Productivity Commission recommendation to replace stamp duties on property transfers - which are a disincentive for relocating - with a broadly-based tax based on land values to ensure revenue is raised efficiently, as well as increase housing affordability and boost transactions.”
“This should be enabled through an increase or broadening of the GST but the Productivity Commission report doesn’t even refer to reform of GST – which is a missed opportunity”.
“There is a need to greater educate the public about the process of tax reform, as has successfully been the case in New Zealand which has used public consultation to successfully increase their GST to 15% in recent years”.
1 April, 2017