Tax reform: Short-term thinking, long-term pain

Media Release: Tuesday 14 May 2013 (7.30pm AEST)

Tonight’s Federal Budget is yet another wasted opportunity to embark on a long-term tax reform plan that is vital to ensure that the country is well positioned for the challenges of the decades ahead, The Tax Institute said today.

“Short-term revenue considerations have resulted in the Government yet again choosing the easy path of tax grabs from business to fund excessive spending commitments”, Tax Institute President Steve Westaway said.

“While Government efforts to protect the integrity of our tax system by closing loopholes are worthwhile, the Budget measures virtually ignore the long-term vision laid out in the Henry Tax Review.

“Tonight’s measures lack any holistic tax reform plan to correct fundamental flaws and restore sustainability of tax revenues,” Mr Westaway said.

“The measures will add significantly to the stock of announced but as yet un-enacted measures. An outstanding agenda of more than 100 tax measures in an election year will heighten uncertainty for business in an already volatile environment.

“After years of cloistered, on-the-run policy making, businesses are again left to make significant investment decisions in the dark.”

Mr Westaway said that tackling base erosion and profit shifting requires more than a few integrity measures designed to bolster the current broken system.

“To date, the Government’s efforts on a broader rethink of the fundamental underpinnings of our international tax system have been underwhelming.

“Government delays have added to base erosion problems. Isolated measures to tackle debt dumping would have been unnecessary if the promised broader rewrite of foreign income taxation laws had been progressed as planned,” Mr Westaway said.

The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.

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