12 May 2005

Australia’s peak business tax group, the Business Coalition for Tax Reform (BCTR), welcomes the Budget measures on personal and business taxation.

The personal tax cuts and the abolition of the surcharge on superannuation contributions indicate that Government has taken steps in the right direction in terms of improving the incentives for workforce participation, for saving and for investment and therefore Australia’s long-term growth.

The BCTR also welcomes the Government’s announcements on welfare to work, Newstart, and Senior Australian Tax Offset measures. They will go some way towards helping to increase labour force participation as we head towards the demands of an ageing population.

Having now reformed the personal income tax thresholds, and returned some of their tax dollars back into the pockets of Australian taxpayers, the BCTR feels that the Government should look at committing future budget surpluses to undertaking more fundamental reform of the personal income tax system.

According to John Stanhope, “The personal tax system directly impacts on business in a number of ways”. Most small business operators pay tax directly under the personal income tax scales, and individual investors in all Australian companies pay personal income tax on distributed profits. Australia’s high marginal tax rates continue to create a major discrepancy between the company and top personal tax rates, which adds complexity to the taxation of small and medium sized businesses. Uncompetitive personal tax rates detract from the rewards and incentives for higher levels of workforce participation and saving.

The BCTR supports the Government’s Budget statements to the States urging for the removal of the remaining inefficient State and Territory taxes as part of the Intergovernmental Agreement on the Reform of Commonwealth-State Financial Relations of 1999 (the IGA). Even after the IGA taxes are abolished, the States and Territories will continue to enjoy significant GST windfall gains. The BCTR encourages the States and Territories to focus on the removal of the remaining taxes and help effect real reform of inefficient State and Territory taxes.

“It’s time for all States and Territories, including NSW and WA, to commit to serious tax reform that provides direct benefits to the community”, said John Stanhope.

The Government’s announced international tax measures will assist in making Australia more attractive to foreign investors and are a positive move towards assisting Australia to remain globally competitive. “The tax measures aimed towards temporary residents are particularly welcomed, as they will assist Australian business to attract skilled labour”, said John Stanhope.

The Business Coalition for Tax Reform (BCTR) is a forum for bringing together the views of the business community on tax reform issues. The BCTR aims to promote and improve Australia’s taxation system. While much has been achieved in recent years in the tax reform arena, the task is ongoing with much still to be done.

The members of the BCTR include Australian Food and Grocery Council, Australian Industry Group, Australian Institute of Company Directors, Australian Retailers Association, Australian Stock Exchange, Business Council of Australia, Corporate Tax Association of Australia, CPA Australia, Council of Small Business Organisations of Australia, Federal Chamber of Automotive Industries, International Banks & Securities Association Australia, Insurance Council of Australia, Investment and Financial Services Association, Master Builders Australia, Meetings Industry Association of Australia, Minerals Council of Australia, Property Council of Australia, Real Estate Institute of Australia and The Institute of Chartered Accountants in Australia.

Contacts:

John Stanhope, Chair, BCTR through Jane Sullivan, General Manager, Corporate Relations Telstra (03) 9632 3701.

Peter Verwer, Chair, BCTR State Taxes Committee (CEO, Property Council of Australia), 0407 463 842 (02) 9033 1926.

Paul Drum, Chair, BCTR Personal Tax Reform Committee (Senior Tax Counsel, CPA Australia), 0414 760 385 (03) 9606 9701