Australia

Details

  • Service: Tax, Topics, Tax Reform, Base Erosion and Profit Shifting
  • Type: Regulatory update
  • Date: 14/01/2014

Tax Insights

KPMG's analysis of tax issues and developments.

Jenny Wong

Jenny Wong
Director, Tax

+61 2 9335 8661

jywong@kpmg.com.au

Tax policy Australia – Top 5 predictions for the year 

by Jenny Wong, Australian Tax Centre

What does 2014 hold for the Australian tax policy landscape? World economic growth remains weak, unemployment is on the rise, and government balance sheets remain stressed. Policies to lift investment and trade, demand, employment, and productivity are needed.

My predictions of tax policy topics that will be discussed in the year ahead:

 

1. G20 and international tax

This is the OECD’s Based Erosion and Profit Shifting initiative aimed at ensuring profits are taxed where economic activities are performed and value is created. The international tax system has arguably failed to keep pace with the rise of the digital economy, becoming a threat to public finances.

 

2. Infrastructure

Tax policies (and other policies) that boost private sector led growth through investment in infrastructure will be a key focus and a key priority for Australia’s G20 Presidency.

 

3. Twin goal policy settings

Tax policies that are likely to be seriously considered (or receive greater focus) are those that meet twin goals of alleviating stressed government finances without harming economic growth in the long run.

 

4. ‘Sacred cow’ policies

Whilst there has been a general reluctance to discuss topics like increasing the goods and services tax (GST) and abolishing negative gearing, the twin goal policy setting approach discussed in #3 ensures a discussion on these topics becomes inevitable. 

 

5. Federalism

Australia’s Future Tax System Review 2009 report recommended that removing inefficient state base taxes should be replaced with broad base consumption taxes. A tax and federalism whitepaper is expected in the coming year.

 

Let’s hope 2014 is the year for a good conversation, quality debate and public education on tax policy issues and the right settings for Australia, where reviews aren’t labelled as ‘just another review’ and we get to see good policies through to implementation.

 

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