After wrapping up the three-day economic reform roundtable, Treasurer Jim Chalmers said the government would not commission another lengthy external review into tax reform despite acknowledging some of the imperfections of the current system.
Chalmers further watered down any expectations for major tax reform in interviews following the roundtable, stating that the Labor party “had not changed its policies” in relation to a range of key tax issues, including capital gains tax changes and a crackdown on family trust taxes.
“When it comes to tax, the government’s tax policies haven’t changed,” Chalmers told ABC radio on Friday.
The Treasurer said the government had already undertaken important work in making the tax system fairer through its Division 296 tax policy for large super balances and implementing tax cuts.
The government, he said, would look at making some improvements to the system such as working on the multinational tax agenda and road user charging.
“The timing of any other changes will be a matter for me to determine with my cabinet colleagues,” he said.
Chalmers said while the government had not altered its views on some of the more contentious issues surrounding the tax system, he acknowledged that more needed to be done to make it fairer in intergenerational terms.
The panel involved in the economic reform roundtable established three key priorities for the tax system. Chalmers said this included ensuring a fair go for working people, incentivising business investment and making the system simpler and more sustainable.
If the government does decide to take further steps down the tax reform path, Chalmers said any policies would be based on the three principles discussed at the roundtable.
CPA Australian chief executive Chris Freeland warned that tax reform should not be delayed as it is a crucial component of the productivity reform agenda.
Freeland said comprehensive tax reform was vital for encouraging investment and driving economic growth.
“Australia needs a comprehensive plan to reduce over-reliance on personal and business taxes, including meaningful GST reform,” Freeland said.
“Tax reform cannot be delayed, nor should the scope be hamstrung by short-term considerations.”
The accounting association said all taxes need to be considered with a view to ensuring the tax system adequately encourages investment, boosts productivity and drives economic growth.
This view has been echoed by other tax experts and economists, with the Institute of Public Accountants’ Tony Greco outlining that any tax reform should be holistic rather than piecemeal as everything in the tax system is interlinked.
“Even GST should not be considered in isolation, it’s part of the things that need to be looked at holistically. Personal tax rates, CGT discounts and all other taxes and concessions all need to be reformatted or reset,” Greco said.
AMP chief economist Shane Oliver similarly agreed that Australia requires comprehensive tax reform to rebalance Australia’s reliance on income tax towards other taxes such as GST.
Oliver also argued that the government should index the income tax thresholds and remove nuisance taxes like stamp duty to incentivise work effort and investment, better allocate resources and reduce the burden on younger generations as the population ages.
“This sounds politically difficult but if combined with an adjustment to income tax scales to offset the regressive nature of the GST, some measures to cap property tax concessions and better tax gas exports, a broad consensus could be reached,” he said.
Of the short-term actions announced by the government, CPA Australia urged the government to prioritise reforms that will deliver immediate and meaningful productivity gains for business, particularly the commitment to reduce excessive regulation.
“We are especially pleased that our recommendation for ‘tell us once’ reform to cut unnecessary compliance burdens has been recognised as a quick-win measure,” Freeland said.
“Requiring individuals and businesses to repeatedly provide the same information to government is a clear example of the inefficiencies holding back productivity. Addressing this sends a strong signal that the government is listening and acting on business concerns.”
Freeland also welcomed Chalmers’ commitment to adopt proposals to cut unnecessary regulation, including those identified by the Productivity Commission.
In addition, Freeland called on the government to finalise its national AI capability plan and support small businesses in adopting emerging technologies as soon as possible.
