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A full review of the base and rate of GST is needed to ease the current compliance burden on small business, says CPA Australia.
Newsletter
Ignoring GST is costing small business
21 May 2014
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8 minute read
CPA's chief executive, Alex Malley, said the current tax system is too inefficient, with excessive red tape and unreasonable compliance costs for small business.
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Mr Malley pointed out that the Henry Tax Review found that of the nation’s 125 state and federal taxes, just 10 collect 90 per cent of the revenue.
"That means we have more than 100 taxes operating at a state and federal level that do little in terms of revenues but do a lot in terms of embedding inefficiency, generating red tape and adding to compliance costs, particularly in the small business sector," he said.
In 2011, CPA Australia commissioned research which showed that even modest adjustments in the rate of the GST could facilitate the removal of taxes on items such as insurance, motor vehicles, conveyancing and payroll; enable reductions in corporate and personal tax rates; and lead to an increase in productivity and economic growth for Australia, said Mr Malley.
“We have to stop thinking of tax reform as adding to the burden. There is enormous opportunity in this debate but we will only take advantage if we have the adult conversation that everyone from the welfare sector through to big business is urging. And that means putting all of the facts on the table,” he said.
"By calmly and systemically looking at the GST, in the context of the entire tax system, we have a timely opportunity to eliminate inefficiency, stop tinkering at the edges and ensure we have a tax system that will enhance our national competitiveness and productivity for the future, while, as COAG reform chair John Brumby noted overnight, protecting our most vulnerable."
Mr Malley said that for too long Australia has ignored the elephant in the room by quarantining the GST from debate and ignoring the obvious benefits that can be achieved from a complete, holistic review of Australia's tax system.
"We cannot continue to put these decisions out into the never-never. Inefficiency and confusion has cemented distrust of tax reform in the past and it is going to take real leadership if we are going to move beyond that and take the community along the journey,” he said.
"With the debate underway in earnest, the government ought to seize the opportunity by bringing forward the timeline for the planned white paper and getting all parties around the table," said Mr Malley.
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