Mr McLeod, who led the most recent comprehensive review of the New Zealand tax system, said the Australian tax system was clearly in urgent need of change.
“Australia’s tax system is in disarray, and the biggest challenge is the depoliticisation of the tax policy process and decisions,” he said.
“To lock in a long-term view of tax reform in Australia we need an approach that is not tied to the timing of the election cycle. We need to re-examine the way we actually do tax reform,” Mr McLeod added.
EY has released a report, Tax reform: A better way, recommending an independent Australian Tax Reform Commission to oversee tax reform matters and take on the responsibilities currently performed by the Board of Taxation and some functions of the Australian Treasury.
“We know this might appear to be yet more bureaucracy, so it is only after carefully weighing of the advantages of a new statutory body that we recommend its establishment,” Mr McLeod said.
“This is not about bigger government; it’s about better government. The tax system is not something you set and forget. The need for reform is a constant and the system needs the flexibility to evolve and change.”
Mr McLeod said the need for comprehensive change to the tax system was almost universally acknowledged but that building consensus on a way forward was a challenge.
“Taxation reform is challenging because of the political, economic and social minefield through which any change must tread. The current system does not meet that challenge.
“The reform landscape is crowded with players who have divergent and contradictory preferences on the direction of tax policy,” Mr McLeod said.
“We want to see an apolitical Tax Reform Commission put in place that provides honest and fearless advice and is expertly informed. With the right processes and institutions we can build a tax system that does not prejudice local businesses or foreign investors and meets the revenue requirements of the nation.”
EY has said it is fully supportive of the government’s commitment to produce a comprehensive white paper on tax reform prior to the next federal election.
“We hope our ideas are a meaningful contribution to that process and to the ongoing wider debate about Australia’s tax system,” Mr McLeod said.