In its pre-budget submission, the Tax Institute has called on the government to assess the ongoing requirements of the exemptions and concessions in the current GST law in a bid to address the simplicity and tax base of the current system.
“The government should undertake a comprehensive review of the current exemptions and concessions in the current GST law to determine their ongoing necessity/appropriateness and to ensure that the simplicity and efficiency that is sacrificed by the presence of these exceptions is still justified,” the Tax Institute said.
“These exemptions and concessions contract the tax base upon which GST could otherwise be applied.
“In the absence of some (or all) of these exemptions and concessions, the GST tax base would inevitably be broader, thus positively contributing to the GST revenue take.”
To fund this proposed increase in GST revenue, the Tax Institute suggests making “necessary” tax cuts in other areas, including personal marginal rates.
“However, there are many factors that will need to be taken into account to assess the ongoing requirements of these exemptions and concessions, including a reassessment of the original policy reason for their inclusion in the first place,” the Tax Institute added.
“There will also be compliance costs for taxpayers to take into account and perhaps the need for grandfathering in some cases in the event of a proposed change of this nature.”
The industry has long been advocating for a national tax reform in an effort to simplify Australia’s complex and often unproductive tax system.
“It is evident that SMEs are calling for a simplification in the tax mix — the extent of state and federal taxes is viewed as burdensome and overcomplicated. More than half of our clients are calling for reform,” said KPMG enterprise tax partner Brett Mitchell.