The Australian business community has spoken on the critical issue of tax reform, highlighting the discrepancy between business and government priorities.
A record 523 respondents from around the country – across sectors and business sizes – have had their say in BDO’s fifth annual Tax Reform Survey.
This year’s survey attracted more than double the number of respondents than in 2015, a clear sign the business community still sees holistic tax reform as an urgent priority even if the government does not.
With the fast-tracked Federal Budget on 3 May, and potential double dissolution election in July fast approaching, I would urge Prime Minister Turnbull and Treasurer Morrison to outline how they plan to tackle tax reform as a matter of urgency.
After getting so close to genuine tax reform through the Tax White Paper process, many businesses feel cheated by its recent abandonment and are fearful the federal budget will present only piecemeal measures and a vague commitment to look closer at tax reform after the next election.
While most – almost 90% – of the survey respondents wanted to see a tax-reform options paper ahead of the federal budget, hope has now all but faded that this will occur in the next five weeks.
Recently, the Federal Government has hinted that company tax rate cuts could be included as part of this year’s Federal Budget, however the BDO survey revealed that, while a company tax rate cut would be welcome, businesses identified other areas as more urgent priorities.
Like previous announcements regarding carve outs of specific tax areas like GST and individual income tax, there is danger in addressing one-off measures like company tax cuts without taking a holistic view.
It is also critical that Federal and State Governments are involved in building the simplest, fairest and most effective tax system we can possibly get.
Certainly from a business perspective, reform of GST to allow for removal of inefficient state taxes have been identified as much more pressing issues than company tax rate cuts.
80.54% of respondents agreed a review of the GST is essential to any discussion of tax reform, with many – 60.23% – in favour of abolishing all GST exemptions to simplify the system. Slightly more – 62.28% – disagreed that the GST rate should never exceed 10%, up from 38.2% of respondents in the first survey in 2012, which shows an increasing support for change of the GST rate.
In terms of how increased GST revenue might be best directed, most respondents preferred the abolition of state stamp duties and reform of other state taxes – 62.4% – over assisting the states to adequately fund health and education – 52% – or enabling a cut to personal taxes – 52%).
Other Key Findings
- 93% disagreed that Australia’s tax system is competitive with international counterparts.
- Two-thirds – 65.51% disagreed that Australia’s tax system promotes it as a desirable location for regional headquarters and investment.
- Less than $1 million – 34%
- Between $1 million and $10 million – 29%
- Between $10 million and $50 million – 20%
- Between $50 million and $150 million – 7%
- More than $150 million – 10%
- 0 employees – 11%
- 1-5 employees – 27%
- 6-25 employees – 20%
- 26-100 employees – 18%
- 101-500 – 13%
- More than 500 – 11%
Lance Cunningham, National Tax Director, BDO Australia