The Great Tax Debate: How Should the Government Spend Our Surplus?

05 May 2006

The Sunday Herald Sun

By Katie Lahey
Chief Executive, Business Council of Australia

Tax – it’s a three-letter word that has a big influence: how much we earn at work (or whether we work at all), how we spend our money and on what and how much we can save for retirement or invest for our children.

In short, it affects every area of our lives and has an even bigger impact on our economy.

There has been much talk in recent months about reforming Australia’s tax system. Why? After all, it seems like only yesterday that one of the biggest changes to tax – the GST – was introduced.

Australia and Australians now live in a global world that is changing faster and faster. Other countries are constantly changing their tax systems to attract a bigger share of the same jobs and investment for which Australia competes.
That means we need to keep looking for new ways to keep taxes low and our tax system simple.

Australian rates of income tax are high compared with other countries. The tax burden on Australian employers is becoming uncompetitive.

Time and money that could be used to create and nurture businesses are being wasted by tax laws that are growing more complex and confusing.
A tax system that stifles investment and job creation slows economic growth.

Without changes to our tax system, Australia will be less able to compete in a global economy.

Our prosperity and living standards will suffer, we’ll have less money to spend on education and health, and there will be fewer jobs.

Australia has enjoyed good economic times in recent years, meaning our governments have accumulated much more revenue than they spend.

This extra money affords Australia a great opportunity to invest in changes that make our economy more competitive.

We need to review the whole tax system, not just make piecemeal changes.

We need to lower rates of income tax as well review the business tax system.

We need to make our tax system more user-friendly because it’s always easier for people to avoid paying their fair share in tax by side-stepping rules and laws that are too complex.

Australia has a choice. We can do nothing – or we can face the future and our competitors with confidence.

A better, more competitive tax system is a big part of meeting that challenge.



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