The government’s ability to deliver a clear and credible economic platform, with an effective tax policy, is clearly important for consumer confidence
Consumers have been rattled as political debate about tax changes intensifies.
The ANZ-Roy Morgan consumer confidence index dropped 2.6% in the week ending February 28 and is back below its long-run average.
ANZ chief economist Warren Hogan says concerns about the economic outlook have come back into play.
People’s views about the economy in the next five years tumbled 7.2%, while the subindex on the outlook in the next 12 months plunged 6.3%.
Mr Hogan said heightened debate about tax policy, with a focus on negative gearing and house prices, is creating uncertainty for households.
‘The government’s ability to deliver a clear and credible economic platform is clearly important for consumers,’ Mr Hogan said.
‘The delivery of a coherent tax policy will be an important part of that.’
In a further sign that an opportunity for real reform, that would boost the economy, has been missed the Turnbull government’s leading tax reform adviser has taken aim at the process used to work through a tax rethink.
Chairman of the Board of Taxation, Michael Andrews, says the government’s decision to run the tax review through Treasury instead of as an independent inquiry, ‘has compromised its ability to win hearts and minds.’
Mr Andrews said that the review was under-resourced, and given the political climate it will be years before bold reform will be attempted again.
Liberal elder statesman John Howard, who this week celebrated the 20th anniversary of becoming prime minister, has also weighed into the debate. He said a GST increase would allow for reductions in personal income and company taxes.
This would allow less reliance on direct taxes, as demonstrated in New Zealand which had a much lower rate of personal tax and a higher GST of 15% that has always covered everything.
‘It’s the purest GST … in the world,’ Howard says.
However, Finance Minister, Mathias Cormann, is confident the government will produce a tax policy that strengthens jobs and growth.
‘Tax reform is an ongoing process, tax reform is not something that happens in one big bang and then it’s over,’ he said.
‘You always have to keep looking at whether there are opportunities to raise the necessary revenue.’
AAP`
AAP and Inside Small Business
