If you want the economy to recover you need powerful tax reform

With the federal budget just weeks away and Australians still reeling from the fallout of the pandemic, the Institute of Public Accountants (IPA) is urging the Government to think beyond tax cuts and implement holistic tax reform to drive productivity, innovation, jobs, and economic growth.

“We are expecting that the Federal Budget to be handed down in less than three weeks’ time, to deliver business incentives, tax cuts and other measures to create jobs and assist businesses to climb out of the COVID-19 mire,” said IPA chief executive officer, Andrew Conway.

“While these will be positive steps to begin the road to recovery post-pandemic, Australia desperately needs holistic, genuine and robust tax reform.”

Tax cuts welcomed but where’s the reform?

Conway said while the tax cuts will be welcomed, they will do little to assist the nation on its path to recovery unless implemented in conjunction with further reforms. According to Conway, a complete overhaul of the tax system is needed.

“Our tax system is not fit for the purpose ahead of recovery from the pandemic, so it is not easy to just make tax changes without considering the broader impact on other aspects of the economy. The various elements are closely intertwined including the tax mix, personal services income, the plethora of inefficient state-based taxes such as payroll tax and stamp duty and other aspects of the economy including our regulatory framework.

“Holistic reform won’t be easy or without controversy, however, it is essential if we are to unshackle the restrictions and realise the potential of the economy in a post-COVID-19 environment.

Governments must work together on the path to recovery

Conway says in order for changes to be made everyone at a government level must come to the party.

“It needs everyone on board, at both Federal and State levels, and working to the one reform agenda. If the pandemic has taught us just one thing, it is the need to work together. National Cabinet has shown what can be achieved.

“Reform of this nature does not happen overnight but if we are to see a rejuvenated Australian economy, it is now time to start the process,” said Conway.

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