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Politics obstructing GST reform

The Institute of Chartered Accountants (ICAA) and the Institute of Public Accountants (IPA) have both claimed political factors are blocking much needed tax reforms.

News Michael Masterman 26 June 2014
— 2 minute read

Both the ICAA and the IPA told AccountantsDaily they support changes to the GST but said politically, any reform would be very hard to sell.

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The comments come on the back of an industry poll conducted by AccountantsDaily that revealed 62.5 per cent of 144 respondents believe the GST is in need of an overhaul.

Tony Greco, the IPA’s senior tax adviser said that both major political parties understand the GST is a sensitive issue and as such, “want someone else to do the heavy lifting” when it comes to selling reform.

“We have a bit of a standoff because we have just had a recent election and neither party has made any commitments in relation to GST because the public aren’t on board”.

Mr Greco said politicians are often too focused on the short-term and winning elections to undertake long-term reforms such as a rethinking of the GST.

“Tax reform hasn’t got very far over the last 10 years because it’s caught up in the political cycle,” he said.

Mr Greco suggested handing the responsibility of tax reform to an independent body, not influenced by political cycles, that can do what’s in the best interest of the country “as opposed to what’s in the best interest of the political parties”.

As reported in AccountantsDaily last week, EY has recently called for an independent Tax Reform Commission to fix the country’s tax system, however, after praising EY for having the courage to raise such an issue, Michael Croker, the ICAA’s head of policy, said it is unrealistic to think the government would give up such a power.

“Tax is such a crucial part of a government’s weaponry, not just in an economic sense but very much in a political sense, that it would be unrealistic for a government to abrogate that important power”.

Mr Croker said cuts to state funding in the recent federal Budget were likely a way of forcing the states to raise the issue of GST reform.

“The state governments are under a lot of pressure now because of the recent federal Budget to come to the party and do something on the tax reform front,” he said.

“It’s a funny way of going about it,” commented Mr Croker.

“It wasn’t the way we expected but the politics of this is really fascinating at the moment,” he said.

Despite the political wrangling, Mr Croker said the ICAA believes reform is necessary to ensure Australians can maintain their current way of life.

“We’ve had a position for a while now that says that the sustainability of the tax base needs to be addressed if we want to enjoy the sort of government services that we have come to expect,” Mr Croker said.

 **Do you think Australia needs an independent Tax Reform Commission? Vote here**

Politics obstructing GST reform
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