The upward revisions to the Budget surplus figures released today as part of the Mid-Year Economic and Fiscal Outlook again underscored the capacity for fundamental tax reform in next year’s federal Budget, the Business Council said today.
BCA Chief Executive Ms Katie Lahey said the results would only strengthen the consensus for major tax reform among business, the community and both sides of politics.
“Companies with consistently strong balance sheets are expected to look at ways to strategically reinvest their surplus funds to bring about a stronger long-term position“ Ms Lahey said.
“Likewise, governments should also act strategically to reinvest their surpluses in ways that ensure robust growth and a sustainable tax base into the future.”
“The figures show that there is scope for tax reform without compromising the government’s commitment to its Future Fund.”
The government’s figures show an estimated surplus of $11.5 billion in 2005–06 and $9.7 billion in 2006–07. Corporate taxation receipts are estimated to be $52.2 billion in 2006–07, almost double the $27.1 billion collected in 2001–02.
“From a fiscal point of view it is crystal clear that the government has both the means and the opportunity to act now.
“We urge the government to take advantage of this opportunity to mark out substantial reform of the tax system in next year’s federal Budget.”
In a recent advertising program paid for by BCA Members, tax reform was highlighted as one of four key steps needed to assure Australia’s future prosperity.
The other steps highlighted were workplace relations changes, infrastructure renewal and red tape reform.
In October, the BCA released a report comparing the tax systems of major industrial countries. The report found Australia’s corporate tax system to be substantially uncompetitive, and recommended a major review of the business tax regime.
“All this points to the fact that on tax reform, the time for action is now,” Ms Lahey said.