Tax policy and reform in Australia 

I'm Rosheen Garnon. I'm the National Managing Partner for Tax for KPMG in Australia.

Australian Tax Reform

So in Australia, tax reform has really been at the focus of what the government's been doing over the last couple of years. We've recently had a tax forum where the government brought together academics, people from the profession, business, welfare groups and unions and talked about where tax reform should go in Australia and that's about making sure that we've got a simple, effective and efficient system but that it is equitable and so that we don't impose the highest level of taxes on those who can least afford to pay. So the challenge we've got is getting the tax reform right and that is using a mixture of different types of taxes to ensure that we've got the right amount of tax flowing to the government to fund their spending programs.

The right tax mix?

So one of the challenges that government has at the moment is getting the right mix of taxes. In Australia we've had business advocate that we should be increasing the indirect tax mix and we should be easing back on the corporate tax rate. Now the challenge for treasury is, “How do you get that balance right?” because what we want to do is we want to make sure we're attracting capital to Australia and by lowering the company tax rate that can help us do that. It will help us attract that capital in. Because our economy is almost at full employment, what that means is that it will drive higher wages, higher wages means that governments will collect higher taxes from the labor. So a real challenge and I'm not sure that any governments got it right anywhere in the world and the fact that we're talking about it at this sort of summit, just sums up how top of mind it is for our clients.

Tax levers

There are really four levers that we see in Australia are important to push in collecting taxes. First one's personal tax, company tax, which we've talked about. We've talked about consumption taxes but the last one is about taxing, what I would describe as, things that come from the land itself. So you can talk about comprehensive property taxes and also these resource rent taxes.

Economic drivers

So in Australia, I think one of the key things for tax policy development are the other drivers that are there that government is looking at. So one of the first things that they're grappling with is the aging population that we've got. What we're setting up today is the legacy for our children and our grandchildren and so they're going to inherit this tax system and therefore getting those balances right, thinking about exactly what's driving the economy, making sure that the economy itself is growing, is really important in this whole debate.

Challenge

I think the challenge that we've got in the world today is the governments don’t have enough revenue and so they're going to leverage everything they can to put themselves in a position where they're getting that maximum revenue base. I think one of the good examples we've seen recently is Singapore, where they are using some innovation and some working between the regulator and also companies to make sure that companies are paying the right amount of GST, and there are incentives in the system so that if the company goes through a particular style of review then they won't get audited for the next three to five years.

The future

What I'd say about the future is that we can expect governments to be looking at the tax reform process more and more. They're going to be looking at tax policy development. We'll also see them sharing their good stories amongst one another because every government is grappling with this and the challenge is how we get that tax collection right but also get their own spending under control, and with the way each of the global economies is focused at the moment that is a challenge. We don't have it right and therefore we can expect further refinement, further push to make the tax systems as simple as they can be, as efficient, but also equitable for each of the people that are participating in that system.