Accounting firm KPMG has come out and suggested the federal government needs to go beyond changes to GST and look at other aspects of our tax system to develop a long-term solution.
That's pretty much what we wrote last week when NSW premier Mike Baird called for the GST to be hiked to 15% from its current 10%. Simply lifting the GST doesn't address many other issues we have in our tax system, such as loopholes for people to avoid tax – such as holding investments until after retirement, when no tax is payable on capital gains or income.
KPMG wants the government to abolish stamp duty and replacing the fringe benefits tax (FBT) in its submission (PDF) to Treasury of more than 60 proposals. The accounting firm also recommends greater integration between state and federal tax collectors, with the abolition of state revenue offices and transition their duties to one tax collector – the Australian Tax Office (ATO).
KPMG says the GST does need to be lifted and broadened, but also that superannuation benefits going to the wealthy should be restricted, tax savings for negatively geared properties cut back, linking tax brackets to average full time earnings (AFTE – to avoid bracket creep) and encouraging women back to work by unlinking their income from their partners.
Linking tax brackets to AFTE would result in four income bands: 15%, 25%, 35% and 45%, with no tax free threshold, but low income earners would still have some protection.
Lowering the company tax rate, changing capital gains rate to 25%, and simplifying family tax benefits and child care payments are also suggestions.
All proposals would become law in 2018, with the three years till then to work through the details and a five-year transition period following to 2023 for implementation.
The main problem, KPMG says, is 'political will' – it is time the Abbott government stopped 'tinkering at the edges' and took action, according to KPMG Australia chairman Peter Nash. A previous tax review was all but ignored, with many of its suggestions unthinkable for governments that won't implement any reform unless it is overwhelmingly supported.
What politicians don't seem to realise is that Australians are willing to give them a fair go and support tough choices if needed. Personally, I'm sick of politicians avoiding the hard decisions to save their necks. Time to stand up and put Australia first and careers second.
