Significantly, the paper proposes that all taxes would be collected by the Australian Taxation Office (ATO), which would subsume all tax collection rights from the states over the next eight years, with federal government bearing the administration costs.
This, according to KPMG, would generate substantial efficiencies for businesses and individuals.
David Linke, KPMG national managing partner – tax and legal, said a key aspect of the firm’s thinking is to improve the way tax is currently structured across the state and federal governments which, he said, is a significant cause of inefficiency.
“That was one of the main issues highlighted in our survey of over 200 CEOs, CFOs, non-executive directors and tax professionals collated by KPMG as part of the consultation process which informed our submission,” he said.
The report also calls for an increase in the GST to 15 per cent, a reduction in corporations tax to 26 per cent, the introduction of new small business and innovation company structures and enhanced R&D offsets.
In addition, KPMG proposes linking thresholds to average full-time earnings to eliminate bracket creep; a 25 per cent discount on personal capital income and expenses, including unfranked dividends; abolition of stamp duty and certain other "inefficient" state taxes for a new property services tax; and overhauling the fringe benefits tax.
Peter Nash, KPMG chairman, said that without substantial tax reform, Australia risks becoming uncompetitive internationally.
“KPMG’s submission to Treasury contains some far-reaching proposals because the situation needs innovative solutions, not just tinkering at the edges. This is a once in a generation opportunity to get tax reform right and as a country we need to set the tax system on a solid footing for the long term," he said.
“As well as proposing solutions for all the various tax areas, we have also examined the system as a whole, which is not working optimally."