Tax and Federation
Australia’s taxation system needs to encourage investment, strengthen workforce participation and support entrepreneurship. It is important that both state and federal governments view Australia as a single national tax base and avoid duplication, complexity and over-taxation.
Our policy principles:
- Encourage economic growth, raise living standards and grow job opportunities
- Facilitate Australia’s competitiveness as a destination for investment and production by reducing the costs of doing business
- Reduce the compliance and administrative burden on businesses
- Improve and maintain incentives for entrepreneurship and innovation
- Maintain equity
Tax reform: Improve the efficiency of the state tax mix by implementing the agreed schedule for the abolition of less efficient taxes.
Federation reform: Clarify and simplify the roles and responsibilities of federal and state governments in public service provision. We must improve efficiency and reduce cost, blame-shifting and duplication or gaps in service delivery.
Goods and services tax: Broaden the base of the GST to include goods and services that are currently exempt, to offset reductions in other inefficient taxes by at least as much as the increased tax. Only then should we consider increasing the rate of the GST provided it will not lead to an increase in the overall burden of tax.
Company tax: Create a clear timeline to cut the top company tax rate to no higher than 25 per cent, in line with the Henry Tax Review recommendation.
Stamp duty: Federal, state and territory governments should cooperate to examine replacing stamp duties and other inefficient taxes with a broad-based land tax.
Dividend imputation: Retain the existing system of dividend imputation.
Negative gearing: Retain negative gearing as a fundamental feature of Australia’s tax system, which allows expenses incurred in producing income to be deducted. Oppose changes that discriminate between asset classes.
- Continue to address multinational taxation issues in conjunction with the OECD’s Base Erosion and Profit Shifting (BEPS) initiative.
- Refrain, as far as possible, from unilateral actions that may undermine foreign investment and economic growth.
Complexity: Reduce the complexity of tax legislation, streamline tax administration and minimise the compliance burden on taxpayers.
Payroll tax: As part of a broader package of tax reform, state and territory governments should commit to reducing and eventually eliminating payroll tax.
Commonwealth Grants Commission:
- Reform the CGC to ensure Commonwealth and state financial arrangements meet the test of equity and efficiency.
- Reward states for good performance.