Tax Forum Discussion Paper on Tax Reform - Next Steps for Australia (159.38 KB) - last updated Monday, 12 September 2011
Submission to Treasury on the Tax Forum discussion paper on tax reform, issued on 9 September 2011.
CPA Australia sets its agenda in the lead-up to National Tax Forum
Date issued: 12 September 2011
A GST increase and abolishing inefficient taxes would significantly boost productivity, research commissioned by CPA Australia has shown.
The research, conducted by KPMG Econtech, examines the overall economic effect should the GST be increased to 12.5, 15 and 20 per cent respectively and how this would help fund the reduction, or abolishment, of inefficient taxes, including: insurance taxes, motor vehicle taxes, commercial conveyancing duty and payroll tax. The number of taxes either abolished or reduced would increase exponentially along with the rate of the GST.
The results show that increases in the rate to 15 and 20 per cent respectively would deliver the greatest productivity growth with standard of living increases, broadly speaking, as a result. Introducing a uniform GST (maintaining the current rate of 10 per cent but including goods and services currently GST-free ) would also deliver significant, but lesser, gains.
Other key findings include:
- increases in the GST rates as outlined above would lead to gross domestic product gains ranging from 0.4 to 0.9 per cent
- a GST rate of 20 per cent would enable cuts to both company and personal tax rates
- the fact that Australia’s rate of GST is low by global standards (the global average is over 15 per cent) is reinforced
- the effect of GST rate increases would vary between industries (finance, motor vehicle and construction industries are among those which would benefit the most)
- increases in GST rates to between 12.5 and 20 per cent would deliver aggregate standard of living gains of between $1.6 and $4.7 billion per year
Alex Malley FCPA, CEO of CPA Australia, said the research highlighted the importance of the need to reach a broad consensus at next month’s National Tax Forum on the need to remove a range of inefficient taxes funded by other revenue sources.
'Our research helps demystify concerns that an increase in GST would hurt Australians. If the forum is to set us on the path to significant tax reform, then we must look at how we can eliminate many of the inefficient taxes Australian businesses face and this includes a serious discussion on the GST. This research raises some interesting points in how changes to the GST can bring about gains in productivity, GDP growth and bring about a boost in living standards,' he said.
'Significant tax reform is ultimately economic reform and if Australia is to successfully address the challenges of the current global economic environment, productivity gains must form the centrepiece and an efficient, world class tax system will be critical to achieving this. The issues covered in this research must be seriously examined if the Tax Forum is to deliver effective long-term economic gains and position Australia ideally for the challenges and opportunities this century presents. They will form a key part of CPA Australia’s presentation at the national tax forum.'