‘Termite’ taxes damaging economic stability

‘Termite’ taxes damaging economic stability

One major accounting body is calling for tax reform and the eradication of nuisance taxes, likening them to "termites" for Australians.

As part of its pre-Budget submission, the Institute of Public Accountants (IPA) is calling on the government to implement holistic tax reform and in doing so eradicate nuisance taxes.

“Nuisance taxes and termites have something in common; termites eat away at the family home while nuisance taxes erode the revenue base and economic stability,” said IPA chief executive Andrew Conway.

“We need ‘big bang’ tax reform with consideration of the total tax mix, not necessarily to change the overall tax burden but to deliver a fairer, more effective, internationally competitive and less complex tax system.”

Mr Conway said payroll tax is an example of a tax that is counterproductive to economic growth.

“It acts as a disincentive to employment and does not motivate small entities to grow,” he said. “It should be removed.”

According to Mr Conway the IPA supports the Henry Review recommendation that nuisance taxes should be removed and reliance on direct income taxes decreased.

“A shift towards greater reliance on consumption taxes will encourage savings and investment and provide a more suitable source of revenue,” he said.

Mr Conway added that state-based taxes, such as stamp duty, are the worst offenders.

“Most nuisance taxes which are inefficient, distortive and inequitable are levied by state governments,” he said.

“Reform in these areas will require an examination of the adequacy of state and territory revenues.

“Stamp duty is another example of a state-based tax which should be either abolished or rates reduced to a level that minimises the drag on the economy.”

‘Termite’ taxes damaging economic stability
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