Business groups are urging the tax review to recommend a GST increase, but accountants say a raft of other reforms are also needed.
Peak business lobbies are urging both sides of politics to contemplate broadening the GST following the Treasurer’s release of a taxation discussion paper on Monday.
The document highlights Australia’s relative dependence on income tax, which makes up about half the Federal Government’s tax take, with corporate income taxes another 22 per cent, while the GST is only 15 per cent.
The report raises the prospect of broadening and raising the GST, an idea Labor has already ruled out supporting.
However, Kate Carnell from the Australian Chamber of Commerce and Industry (ACCI) said changes to the GST must be discussed.
“The figures are pretty clear here. The GST has to be in the mix if we are to afford the things that Australians want to pay for: that’s our ageing community, the increased cost of health, the National Disability Insurance scheme, just to name a few,” she argued.
Taxation experts agree that Australia can afford to increase both the base and the rate of the GST and still remain competitive.
The Federal Government’s tax discussion paper raises the prospect of increasing the GST.
University of New South Wales tax professor Michael Walpole says the GST should be charged on food and health costs.
“There’s increasing consumption in those areas and in the GST sheltered areas,” he observed.
“I think the discussion paper reveals that, and so they have to be clawed back into the base, but this has to be done in a sensible way that doesn’t adversely impact those who are less well off in society.”
There are plenty of tax reforms that can encourage work and financial prudence rather than speculation, tax avoidance and debt.
Accountants say the Federal Government’s tax white paper should not treat GST as the be-all and end-all of tax reform, however.
Chartered Accountants Australian and New Zealand said the system could be made fairer and more simple by ending key tax concessions on property and shares.
Michael Croker, the head of tax policy at Chartered Accountants, said changes to negative gearing and dividend imputation are on the table.
“I think at the end of this process there will be some agreement that certain concessions that have been enjoyed by tax planners over the years may not be there,” he told ABC News.
“It’s a case of simplifying our system to make it both fairer and [give] less encouragement to tax planning and avoidance behaviour.