16 February 1998

Mr. Fergus Ryan, Chairman of the Business Council of Australia’s Tax Reform Taskforce, today welcomed the Treasurer’s statement on the need to reform the Australian tax system.

"Modernising our tax system must be a priority. The crisis faced by Australia is that our present taxation system is increasingly unable to deliver revenue to fund basic elements of the "good society"," Mr. Ryan said.

"The BCA whole-heartedly agrees that the system we currently have doesn’t work. Our tax system is neither fair nor competitive. It destroys jobs rather than creates them and ultimately will prove inadequate to meeting the task of providing government with the revenue it needs to play its role in providing for welfare, health, education and security. Welfare groups including ACOSS are well aware of the shortcomings of the current system and are among the first to recognise the need for reform" Mr. Ryan said.

"We need a new approach to tax reform that finds the common ground on which to forge community support to build a better system. Increased community awareness regarding the problems with the current system is a critical step if we to achieve a better and fairer system of taxation." Mr. Ryan said that, "The Government’s approach is appropriately broad and comprehensive. The Treasurer’s statement highlights the inequity of high effective personal tax rates, the complexity and high compliance costs of the current system and the fact that indirect taxes are in a mess."

Mr. Ryan went on to say that, "wholesale sales tax is obviously an important area for reform but we must not lose sight of other indirect taxes, which account for over three quarters of total indirect tax already being paid in Australia today. Payroll tax for instance causes all the same problems as the wholesale sales tax. Payroll tax is levied at many different rates, it is selective, it is a hidden tax, it is an additional cost on business, it is costly to comply with and it is a tax on our export and import competing industries. Above all it is a tax on employment."

"The Government’s principles for reform highlight the important issue of Commonwealth/State financial relations. The Business Coalition for Tax Reform has also focused on the need for the States to have certainty of revenue and to eliminate taxes that don’t serve us well as a nation, such as payroll tax."

He concluded that "The Business Coalition for Tax Reform looks forward to ongoing dialogue with the Government, the States and welfare groups, including ACOSS to build the case for a better tax system that will stand Australia in good stead into the next century."