Tax Forum: Additional Comments

The Business Council of Australia continues to be a staunch supporter of tax reform and we expect to make a substantial contribution to shaping the national tax policy debate in the lead up to the tax forum.

The report of the Henry review has provided a strong foundation for an informed debate to occur in the lead-up to, and at, the tax forum and should be drawn on by an engaged community.

As such, the proposal to build the tax forum around six sessions corresponding to the main chapters from the Henry review – personal taxation, the transfer system, business taxes, state taxes, behavioural taxes and system governance – is sensible, extends across areas of considerable interest to the BCA and is supported.

The BCA remains of the view that central direction for tax reform should be to effect a change in the tax mix over time to shift the revenue base away from taxes on capital and earned income and move to a system with a greater reliance on indirect taxes, including those on consumption.

It is well accepted that such a move will do more to support growth and investment and workforce participation than the system in place today. 

The BCA, along with many others, sees reform of state taxes as a particular area of reform that could deliver benefits to make our economy more competitive.

Any reform of state taxes must inevitably include consideration of options around the GST, including the potential to broaden the base to tax food and other exempted items and to revisit the rate of the tax.

A central concern will be to determine how to transition to such a new system, and the BCA expects to devote considerable resources to both identifying the best tax system which is in Australia’s long-term interests, and in contributing to a debate on options that could be considered in pursuit of this system – including different transition paths and identifying the trade-offs that will inevitably be required.