RSM Bird Cameron on tax reform 2016

THE call that the 2016 round of tax reform is dead before it starts is much exaggerated according to RSM Bird Cameron.

Craig Cooper, director, RSM Bird Cameron, said, “Meaningful reform will be extremely difficult to achieve, given the current economic environment, and the present political landscape. But that doesn’t mean that all reform is dead in the water.

“If vested interests do stymie substantive reform measures, then the next Federal election will be a farce. It is likely to be fought around another pork barrel of unsustainable giveaways, and the bill for the existing social programs cannot be funded sustainably. This also makes it unlikely that the Government will be able to repair the budget as promised, or deliver any new growth initiatives.”

RSM Bird Cameron believes that the public voice is missing. It has been silent to date, and quite possibly confused by the claims and counter-claims advanced by the competing vested interest groups.

Craig Cooper said, “Australian taxpayers could be forgiven for this apparent disengagement. Tax reform has become a fixed agenda item for recent successive Governments, and taxpayers may well ask whether they receive value for money from these exercises, or whether tax reform is simply a euphemism for yet another round of tax increases. Fatigue, cynicism or simply ennui seem reasonable public responses in the circumstances.”

Despite this there is no doubt that Australia is currently living beyond its means.  

Craig Cooper said, “The issue is: what is the right mix of remedial action? What programs can be scaled back? What taxes will be increased and/or what changes will be made to the tax mix? How best can we come back to living within our means, without stalling the economy?

“In economic terms, finding the right remedial balance and the least distortional tax mix will encourage economic growth.

“The objective of tax reform is unequivocally for governments to collect more tax overall, not less, and in the most economically efficient manner. Individual Australian taxpayers will bear that increased tax burden, with the open question being how that tax increase will be shared amongst the tax-paying population.

“The reality of marginal tax rates is that an increase in rates at the upper income range will make the welfare lobby feel good, but raise very little revenue. To raise significant revenue, the middle income brackets must be taxed, and/or the cost of social programs reduced. Individual taxpayer responses to tax reform will be largely influenced by how they are affected by the tax/transfer system.

“The battle between capital and labour is over: capital has won. With decreasing global tax rates on company profits, the tax burden can only move to individuals. This is through higher marginal tax rates, which kills productivity and participation, or through an increase in indirect taxation, and/or increased recourse to other consumer-related taxing bases, such as fuel taxes or land taxes.”

About RSM Bird Cameron
RSM Bird Cameron is the largest mid-tier accounting firm in Australia with national ownership and profit sharing and offers a full range of specialist advisory services, including business consulting and advisory, assurance and advisory, taxation consulting, corporate consulting and turnaround and insolvency. RSM Bird Cameron is a core member firm of RSM International, the seventh largest network of independent accounting and consulting firms in the world.

www.rsmi.com.au

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