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