Tax tipped to be major feature of election campaign
An election resulting in a minority government could see the Greens play a greater role in tax policy, a Deloitte tax partner says.
Tax is already shaping up to be a major feature of the election campaign, with parties already making noise about particular tax issues, according to Deloitte partner, tax, David Watkins.
Speaking in a discussion panel at the Tax Summit this week, Watkins said the Greens party have already touted several major tax policies in recent weeks including announcements about Robin Hood taxes and big corporation taxes.
Last month, the Greens announced they would be taking a series of Robin Hood reforms to the next election, including a 40 per cent tax on the excessive profits of big corporations.
The party also wants to impose further taxes projects for big corporations operating within the gas and oil and coal and mining industries.
“If you look at the Greens’ tax policy, there’s already plenty of noise and announcements about Robin Hood taxes and big corporation taxes,” said Watkins.
He noted there are already some people predicting that the next election will result in a minority government and if that does occur, then tax policy could potentially head in that direction.
“Alternatively, we could see the main two parties genuinely take on a commitment to undertake tax reform with some more mainstream type measures,” he said.
Watkins remarked there are two things that he’d like to see in relation to the next term of government.
“Firstly, I’d like to see the long list of announced but unenacted measures dealt with.
“Secondly, I’m hopeful that politics can be navigated so that tax reform, in a more substantial sense, becomes an important aspect of the next Parliament.”
The Tax Institute president Todd Want said the short political terms in Australia was one of things hampering more comprehensive tax reform.
Want explained this tends to result in short-term policies, particularly as it’s rare for one party to have control of both houses.
“Over the last 40 years, the number of times that one particular political party has had control over both houses was a three-year window 20 years ago,” he said.
“Apart from that, we’ve had one house, and we’re now facing the prospect that if we end up with a minority government again, we’ll have neither house, and there will be [more difficulties].”
Want said the government has also neglected a lot of the SME-type issues relating to areas such as Division 7A and the things that impact a considerable volume of people and advisers everyday.
For Watkins, the government’s lawmaking process over the last couple of years has been suboptimal and could be done better.
“For example, the thin capitalisation reforms and the changes to the interest deductibility rules,” he said.
“We saw that law almost a year after it came into effect, so that’s not best practice.
“One of the other measures taken to the election was around denying deductions in relation to payments for intangibles. Now that was announced early in 2022 before the election. It was to be effective from 1 July 2023. We saw two exposure drafts and then in May this year, nine or 10 months after it had in theory commenced, was canceled. So again, not best practice.”
Watkins said the recent controversy regarding the determination for tax agents was yet another example of where the government could have done better.
He is optimistic that in its next term, the government will engage in more effective consultation processes and deliver better quality laws.
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