Temporary Levy Not the Way to Tackle Fiscal Deficit

“A temporary levy to deal with Australia’s deficit, as speculated in today’s media, is not a solution to the fiscal challenge and could let governments off the hook on the structural steps needed to fix the budget properly,” Business Council of Australia Chief Executive Jennifer Westacott said.

In its 2014–15 Budget Submission, the Business Council urged the government to bring a structural solution to what is a structural problem.

“Temporary tax increases are no substitute for the reforms that are needed to bring spending back under control and put the budget onto a more sustainable footing,” Ms Westacott said.

“We’re spending more than we are earning and, if not corrected, this will only get worse as the population ages and the cost of health and aged care services becomes unaffordable.

“The focus of this year’s budget needs to be on eliminating government waste and inefficiency, and better targeting government programs and payments to those who need them the most so we can live within our means over the coming decades,” Ms Westacott said.

“Any changes to revenue should be done as part of comprehensive tax reform, and the tax white paper process later this year provides the best opportunity to look at options for improving revenue and better supporting growth.

“Australia needs comprehensive tax reform implemented over the medium term, rather than ad hoc levies in this budget.

“In short, what we need is a new approach to budget and fiscal management that ensures we are on the right path for the future.

“Raising Australia’s already high dependence on personal income tax will place an increased burden on workers and could weigh down an already sluggish economy. If we are serious about lifting our productivity and competitiveness, we should be lowering taxes, not increasing them,” she said.

For further information contact:
Scott Thompson, Director, Media and Public Affairs
Business Council of Australia
Telephone (03) 8664 2603 | Mobile 0403 241 128