The Government's decision to scrap the statutory formula method of calculating car fringe benefits tax liabilities will reap $1.8 billion, which will partly fund removing the fixed carbon price a year earlier than planned.
Once again, we have seen a Government spending announcement accompanied by a tax policy change made solely to help pay for it.
If this is what we have to look forward to in the lead up to the federal election, then we can kiss goodbye to any prospect of sensible tax policy decision making for the foreseeable future.
Please refer to my opinion article on this in the Financial Review of 18 July.
In the State arena, and following on from the lead taken by the ACT Government to conduct its own internal tax review, South Australia has embarked on its own Inquiry into its tax system. As thought leaders in this area, The Tax Institute took the opportunity to become actively involved. After lodging a submission to the South Australian Parliamentary Economic & Finance Committee who are conducting the review, on Friday 12 July, we were invited to appear before the Committee to give evidence about opportunities for reform and improvement. Our President, Steve Westaway CTA, together with Paul Ingram CTA and Tax Counsel Stephanie Caredes CTA gave evidence to the Committee.
Tax reform is a very difficult task, particularly for a State Government attempting to do so on their own. However, the States should not be left to their own devices to undertake tax reform; it is the responsibility of all levels of Government to address the inefficiencies in our tax system, even if it involves removing inefficient State taxes such as stamp duties and looking to explore more efficient taxes such as land tax. It's about finding and creating sustainable revenue streams for all levels of government. We eagerly await the outcome of the review.
Self-education expenses cap
This week we lodged a submission to Treasury together with the Law Council of Australia on the proposed self-education expenses cap. We strongly argue that the Government will realise that the use of such a blunt, pervasive instrument is a disproportionate response to their perceived concerns with the current deduction for self-education expenses.
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.