CA ANZ urges budget tax reforms to go beyond ‘sugar hits’
Productivity concerns, skills shortages, intergenerational inequity, and an ageing population necessitate “substantive tax reform”, CA ANZ says.
Peak accounting body, CA ANZ, has called upon the government to attach a roadmap and timeline for “substantive tax reform” and productivity reforms in next week’s budget.
In a statement released on Wednesday, CA ANZ urged the government to heed the recommendations made in its pre-budget submission, including support for small businesses and talent shortage relief.
It claimed that piecemeal reforms would not address the biggest issues facing the Australian tax system, including its dependency on personal income taxes, intergenerational equity challenges, and the need to fund the growing costs of the country’s ageing population.
“There have already been numerous reviews of Australia’s tax system. Government should announce a roadmap of how Australia will achieve tax reform,” it submitted.
“We appreciate the economic headwinds the country is facing, so that’s why we shouldn’t be looking at sugar hits but rather substantive and sustainable reform,” said Simon Grant, CA ANZ group executive of advocacy and international development.
The peak accounting body’s pre-budget submission contained a laundry list of recommendations to reform the tax system across the near and short term.
The recommendations included a continuation of the instant asset write-off scheme to support small businesses; skills investments to support sustainability reporting; the creation of a modern company register linking a director’s ID to their companies; superannuation, taxation, age pension, and aged care environments reforms for ageing Australians, and more.
Grant added that the government should be mindful of how personal income taxes could affect Australia’s chances of securing talent amid ongoing shortages.
“Policymakers need to keep in mind the competitiveness of our personal tax system, especially considering the global talent shortage.”
Beyond tax reform, the body also called for targeted investments in digital, AI, sustainability, accounting, and financial skills and education to meet the skills shortfall.
“We need to make it easier for businesses to be in business – that includes having a skilled and educated workforce, so we will be looking for the Budget to extend the 120 per cent training boost,” said Grant.
Jobs and Skills Australia’s latest priority list found that 36 per cent of occupations were facing a national shortage, including tax accountants and auditors.
As noted in CA ANZ’s pre-budget submission, resolving the skills shortages will help to address the country’s productivity challenge.
The Tax Institute also recommended that the government reduce its reliance on personal income tax in its pre-budget submission, claiming Australia was more dependent than its OECD counterparts.
“The current heavy reliance on inefficient taxes, particularly personal income tax, hinders the government’s ability to raise sufficient revenue to provide a better future for Australians,” it said.
Like CA ANZ, it suggested diversifying the tax mix by relying on more efficient “broad-based taxes” including the GST and land taxes.
Former Treasury secretary Ken Henry, who has been among the loudest voices calling for comprehensive “big bang” tax reform, restated his beliefs in an interview on Wednesday.
“I’ve heard the Treasurer say that he’s doing tax reform in bite-sized chunks. He needs to develop a bigger appetite or a bigger mouth,” he told the ABC’s Insiders on Background podcast on Wednesday.
According to Henry, Australia is past the point of incremental tax reform. In an address to the Tax Institute in March, he said that the tax system is no longer “capable of raising sufficient revenue to fund the activities of government. Certainly not today. Far less at any time in the future.”
“Right now, commonwealth tax revenue should be at least 2 per cent GDP higher. That’s about $50 billion a year in today’s money,” he said.
"And, given the pressures of accelerating spending on defence, health care, aged care, and disability support, among others, we are clearly going to have to raise the tax-to-GDP ratio even higher over the decades ahead.”
“No amount of incrementalism is going to meet our fiscal challenges, far less turn around two decades of declining average living standards.”
"There is no point planting a seed in a desert when what is needed is continental scale reforestation.”
