Thursday, September 09, 2010

The expanding summit. Let's see. Superannuation, GST...

Good, eh?

Treasurer Wayne Swan is under pressure to broaden the scope of next year's tax summit to include discussion of the Goods and Services Tax.

The deal with the independents that handed Labor government includes a commitment to convene a "public forum of experts" to discuss the Henry Review by June 2011.

Mr Swan confirmed yesterday that all 135 recommendations of the Henry Review would be up for discussion including those his government had specifically ruled out, among them more highly taxing capital gains and rationalising taxation of alcohol.

"We said there were some things that we as a government would never do, and we said there were many other recommendations of Henry on which we wanted to see a community debate and discussion in the next term of Parliament," he said.

While he was not keen for a debate on the 19 recommendations ruled out he accepted that the June forum would have the right to consider them, along with the mining tax for which legislation would be prepared in parallel with the summit.

"I am sure there will be many people who will want to discuss issues in Henry that we ruled out," he said... "They may want to discuss the draft mining legislation. I am relaxed about that but the Government is very firm in its commitment that we must progress this piece of legislation."

PricewaterhouseCoopers tax partner Tim Cox welcomed the commitment but said the summit had to go further and examine the Goods and Services Tax, about which the Henry Review was specifically prevented from reporting.

"The countries we compare ourselves with are increasing their rates of GST. New
Zealand lifted its rate from 10 to 12.5 per cent and will lift it again to 15 per cent next month. Britain lifts its rate to 20 per cent in January."

"The costs of putting the system in place have already been borne. If we lifted our rate to 12.5 per cent, most companies could do that in an afternoon."

A boost in Australia's rate from 10 per cent to 12.5 per cent would raise an extra $12 billion, climbing to $15 billion in three years time.

Used to fund a cut in the rate of personal tax, company tax, payroll tax or or state-based so-called nuisance taxes the increase could be attractive.

"We should not consider tax changes in isolation," said Professor Julian Disney of the Community Tax Forum, which has no position on the GST.

"If all you do is discuss the popular measures in the Henry Review and not the unpopular ones, you won't get a system which hangs together. We certainly want those measures ruled out back on the table."

A spokesman for the Treasurer was last night unsure as to whether the GST would have a place in the Tax Summit saying "the details of how the forum will operate and what will be discussed are yet to be announced, but we have said consistently that the government has absolutely no plans to raise the GST".

Australian Industry Group chief Heather Ridout who sat on the Henry Review said including the GST in the summit was no guarantee it would be increased.

"I was at the last tax summit in 1985 where we did not make progress and threw out the GST, so they're not without their complexities," she said.

Published in today's SMH and Age

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