Tax reform is doomed, say KPMG bosses
Prime Minister Tony Abbott and Treasurer Joe Hockey should not be ruling out particular aspects of the tax system that could be reformed, such as GST, superannuation concessions and negative gearing, KPMG’s chairman Peter Nash says.
Mr Nash said when the tax white paper was first announced by the Coalition he was optimistic that “substantial reform” could be achieved.
“I have become less optimistic we will be able to achieve that, as the Treasurer and Prime Minister have ruled out certain aspects of reform,” Mr Nash said at a briefing of business journalists in Melbourne.
Mr Abbott and Mr Hockey have already ruled out changes to negative gearing, superannuation concessions and to the rate or base of GST.
Mr Nash said New Zealand was a perfect case of how to take on tough areas like GST and achieve long-term reform.
Australia would bear the cost if this unique opportunity to fix the tax system was wasted, Mr Nash said.
“We have to look past the noise of the lobby groups,” he said. “For every area of reform, there’s a lobby group that will scream. We have to put that aside.”
KPMG chief executive Gary Wingrove also questioned whether there would be bipartisan political support for reform. “You’d need an element of that to get changes,” he said.
Mr Nash said aside from lowering the company tax rate, the government should also look at personal tax reform. It was not sustainable to rely on bracket creep to fund revenue, he said.
Mr Nash also defended nations such as Singapore with low tax rates. He said Singapore was not a tax haven, and was well within its rights to offer competitive rates that attract business investment.
Mr Wingrove said Australia would never be able to compete on tax rates alone, but that a cut to the 30 per cent company tax rate needed to be considered.
The May budget included a 1.5 per cent company tax cut for incorporated small businesses, but the rate for companies with over $2 million turnover remains at 30 per cent.