The October reform forum, whose attendees included trade unions, business and social groups and academics, as well as federal and state government representatives, was designed to be a place for open debate and policy-proposing, with Deputy Prime Minister and Treasurer Wayne Swan telling International Tax Review in the lead up to that event that:
“People who attend the Tax Forum can raise anything they want and we’re looking forward to a wide-ranging debate, but the Government has been clear all along what we won’t do, such as increasing the GST. The Tax Forum will focus on the broad sweep of topics in the AFTS [Australia’s Future Tax System] review.”
However, the Australian government went into that forum with certain ideas already set in stone, and some issues were not up for discussion, with government claiming separate processes were already underway to deal with them. With past reform proposals having failed to translate into implementation, stakeholders were left unhopeful of an actual overhaul of the system.
Those fears proved correct, and businesses now want a concerted and committed effort from government and policymakers.
“If Australia is to remain competitive, prosperous and productive, the Australian Parliament must be prepared to embark on a 10-year, comprehensive reform of the tax system,” said Jennifer Westacott, chief executive of the Business Council of Australia.
“Tax reform must include: a change in the mix of taxes to reduce our reliance on taxes that discourage investment and savings such as income taxes, and increase our reliance on more stable indirect taxes such as the GST; a more efficient distribution of taxes from the Commonwealth to the states; and the removal of a range of inefficient state taxes that raise relatively little revenue such as stamp duties,” added Westacott.
Reforming the tax treatment of losses is one area in which the Business Tax Working Group – established following the October forum to “look at how our tax system can best help businesses increase productivity and respond to the pressures of a changing economy – is already underway in tackling.
“Reforming the tax treatment of losses may be one way to encourage investment in Australia, particularly in struggling businesses, leading to higher productivity and wages,” said Swan.
The Working Group’s interim report on the tax treatment of losses is available on the Treasury website. Consultation closes on 3 February 2012, and the group’s final report is expected in March.
