Company Tax and Taxation Reform
The tax and transfer system is no longer doing the job the community expects. My sense is that, the environment is ripe for a discussion about a fair and broad based reform of the tax system.
Government revenue has become increasingly dependent on personal income tax as other forms of taxation have fallen away. For example, the percentage of household spending subject to the GST has fallen from a little under 61 percent to less than 56 percent in the years since its introduction at the beginning of the 2000s. Over the same period, fuel excise has fallen from 1.5 percent of GDP to a little over one percent.
In short, according to the Parliamentary Budget Office, an array of taxes from the GST, to taxes on alcohol and tobaccos, to the FBT, to company taxes, as well as taxes on fuel products, have all fallen as a percentage of GDP since the beginning of this century. At the same time, the budget is still struggling to return to balance and net debt continues to rise. I have questioned the need for the Government’s self-imposed and non-modelled 23.9% ratio of tax to GDP, especially in the face of the Treasury Secretary’s viewpoint of increased uncertainty and accumulating downside risks to the economy.
In March 2018 and then again in August 2018, I opposed the proposed company tax cuts legislation on the basis that the best evidence to date found that the corporate tax cuts already in place since 2016 have had next to no impact on wages and a small effect on jobs and investment.
In my view, the money earmarked for speeding up the tax cuts for all companies with a turnover of up to 50 million dollars would be better spent on expanding the instant asset write off, expanding R&D concessions, and spending more on physical and intellectual infrastructure, as well as education, health, and reducing debt.
We are fortunate that we already have a template for broad-based tax reform. The Henry Review of the Tax and Transfer System, with its proposals of 5 principle reforms and 149 recommendations is an exemplary framework from which comprehensive and effective tax reform can emerge.
History shows that it is only comprehensive, fair and adequately compensated tax reform which can succeed.
Actions So Far
- Tim Storer opposed to banks 'carve out' on company tax cut
- Company tax cuts need to be part of broader reform: Tim Storer
- Tim Storer asks crossbench colleagues to prioritise tax relief for lowest
- Senate newcomer Tim Storer plays hardball on company tax