Big Business Wants Simplified Tax Regime

Transcript of comments by BCA President Michael Chaney to the ABC Radio AM program regarding the BCA report Tax Nation: Business Taxes and the Federal–State Divide.

10 April 2007 

Tony Eastley: While Labor Premiers press their arguments, the big end of town is calling for an overhaul of the way business is taxed.

In a report out today two influential lobby groups, the Business Council of Australia and the Corporate Tax Association want the Productivity Commission to review the overall tax system and recommend some reforms.

According to the survey, big business paid $27.5 billion in taxes last year through 56 separate taxes.

The President of the Business Council, Michael Chaney, has been speaking with our Business Editor, Peter Ryan.

Michael Chaney: What the survey found was that, for example, 70 per cent of the taxes that are collected account for only 17 per cent of the actual tax that’s paid, and so you’ve got a heck of a lot of small taxes, mainly levelled at the state level, which aren’t collecting very much revenue but which require significant compliance obligations on the company.

Peter Ryan: Are you saying, though, that a single streamlined system would see business pay less tax?

Michael Chaney: It’s not a question of less. It’s a question of more effective and efficient collection. What we’re proposing is that that the government refer this whole issue to the Productivity Commission so that somebody independent and with the necessary expertise can stand back and have a look at the whole business tax system and make recommendations on how it can be made more effective.

Peter Ryan: So, it’s not the amount of tax that’s the problem, it’s the burden of paperwork and the time that it takes given the state, territory and federal jurisdictions?

Michael Chaney: That’s the main thing, but there’s a secondary issue as well and that is that we think that it’s necessary for the Productivity Commission to have a look at a projection of future tax revenues coming from all of these different taxes, and match that against a projection against future expenditure obligations.

Because as you know, some of the taxes are collected by the states and spent by the states, some are collected by the Commonwealth and distributed to the states, and somebody really needs to have a good look at the whole system and make sure that as we go forward we’re collecting taxes in the, in the right areas and we’re doing so in an efficient and effective manner that doesn’t impose huge compliance costs on business.

Peter Ryan: Now you’ve even written the terms of reference for the Productivity Commission, so just how urgent is the proposal and do you have a deadline in mind for action?

Michael Chaney: What we’ve proposed is that if the Productivity Commission were appointed to do this now, they’d probably take the best part of a year to come to their conclusion. That’s quite convenient in the sense that it would take it right outside the election cycle, and I think governments could respond more objectively to it in 2008 than they can in 2007.

Peter Ryan: So you’re not really expecting any direct action or commitment during an election year?

Michael Chaney: Well, we’d certainly hope to see a commitment to carry out the task, but the task itself is likely to run over the course of the next year.

Peter Ryan: Is this just about the big end of town though? Is there a similar case to be heard from small and medium businesses?

Michael Chaney: Well it’s probably even more the case, because all businesses whether they’re big or small have to comply with these taxes and it’s not just, frankly, that there are 51 separate taxes to pay, potentially, but each state usually treats each tax ion a different way. And so you’ll find that for a company operating across the country there could be 160 or 170, effectively, different taxes to pay and observe.

For a small company, that can be very onerous in terms of compliance costs compared to the, you know the profitability of the company.

Transcript sourced from www.abc.net.au