Upcoming election to bring tax system ‘back in focus’: Tax Institute
Debate around the sustainability of the tax system is likely to heat up as the federal election draws closer, says The Tax Institute CEO Scott Treatt.
Speaking ahead of The Tax Summit next month, Treatt said tax practitioners and businesses are currently facing an uncertain environment at the moment amid economic pressures, constant regulatory change, and an election on the horizon.
Treatt said with the current tax system becoming increasingly outdated and ill-equipped to deal with the challenges of today, discussion around the integrity and sustainability of the tax system is likely to become a bigger talking point among political parties.
“As we move towards this election, the tax system is going to come back into focus as it’s the cornerstone of the economy. It’s how we fund public services and infrastructure,” said Treatt.
“I’m sure we’ll see debate around the sustainability of the tax system come up.”
Treatt said that earlier this week, Treasurer Jim Chalmers warned that the significant drop in iron ore prices will leave a $3 billion shortfall in tax revenue.
“It was only in January this year, just eight months ago, that he was celebrating a $18 billion windfall in the budget due to the same issue. It’s a massive swing in a small period of time,” he said.
Treatt said Australia is currently in a situation where businesses are dealing with excessive regulation alongside rapidly developing technology and that taxation laws are now struggling to keep up with a lot of this change.
On top of this, Australia is also suffering from a shortage of skilled tax professionals, he said.
“We’ve got an environment where we’re resource constrained and we’re increasing regulation which is also reducing the attractiveness of the [tax] profession,” he said.
Government agencies are similarly facing resourcing pressures following the constant stream of regulation.
“Government agencies now have this massive back log of new law design that they need to provide guidance for and the ATO too under resourced to be able to provide that advice,” he said.
“So, we’ve got reduced resources, increased pressure on agents, a reduction in the attractiveness of the profession, compounded with a complex tax system. Something’s got to give.
“Unless we’re willing to have debates around the issues within our system and start dealing with some of the problems, [it’s] just going to get more and more challenging.”
Treatt said the pressure to address the ongoing issues in the tax system may heat up in coming months with some of the independent MPs such as Allegra Spender looking to drive change in this area.
“Some of the independent MPs are good role models for sparking the debate,” he said.
“We won’t see change though until our leaders actually identify that the future integrity of our tax system and our tax collections is at risk. They’re so focused on the here and now that I don’t think they’ve yet identified that problem.”
Treatt said The Tax Summit next month will delve further into many of these issues while also highlighting many of the emerging opportunities for the tax profession.
The conference will offer a range of sessions focused on preparing tax professionals for the big-picture issues facing the industry. This includes a Q&A panel session on being “future fit” that will explore how businesses can balance employees’ needs and their commercial objectives while also managing the risks and opportunities that come with new technologies.
The event will also feature prominent keynote speakers including an address from ATO Commissioner of Taxation Rob Heferen.
