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CURRENT INCOME TAX LAWS UNSUSTAINABLE - TAX BOARD CHAIRMAN TELLS
CONVENTION
Australia's existing taxation laws were in desperate need of an overhaul,
Board of Taxation Chairman, Mr Dick Warburton, said today.
Speaking on the role of the Board at the Taxation Institute of Australia
(TIA) National Convention in Canberra, Mr Warburton said the original
Income Assessment Act of 1936 contained a modest 81 pages. Over the past
65 years, through numerous "band aid" reforms, tax law has ballooned
to some 4,500 pages.
Tax law based on the Tax Value Method (TVM) could reduce the current
law by around 40 per cent, he said.
Likening current laws to the surface of a road containing potholes, cracks
and bumps, Mr Warburton said it was pointless continually repairing the
tarmac when the road's structure and foundations caused the real problems.
Better foundations to the road would improve the surface.
"Many of problems with income tax are because of the law's concepts
and themes. The best way to fix the law is by fixing the foundation."
Mr Warburton said Australia could no longer afford to simply repair the
"tarmac" of its taxation laws, but urgently needed a major overhaul
of the tax system to maintain Australian business competitiveness in the
global economy.
"Whether this reform is through the TVM is yet to be determined.
But what is clear is the need for a fundamental restructuring and reform
of current income tax law.
"Doing nothing is simply no longer a viable option."
The current law was embedded in the realities of an era long gone, and
was far too complex and voluminous relative to what it was supposed to
achieve.
Mr Warburton said the TVM, if implemented properly, had the potential
to underwrite the development of a stable, less ambiguous and more understandable
income tax system, and in particular, a system more readily conducive
to a manageable, ongoing development into the future.
He said the Board acknowledged there was clearly tax reform fatigue throughout
the community.
"Therefore, it was understandable there will be a good deal of
emotion and scepticism pervading about the prospects of such a major and
fundamental reform that the TVM would represent.
"The Board asks the community to move beyond this - and to objectively
assess all of the issues on their respective merits.
"The Board is looking to organisations such as the TIA, among others,
to contribute their expertise to advancing the goal of achieving sensible,
workable, lasting reforms that will ensure Australian's income tax system
meets the needs and challenges of globalisation in the 21st century,"
Mr Warburton said.
Mr Warburton also outlined to the Convention other Board activities and priorities including the development of more effective tax law consultative and implementation processes; assisting in the development of the Government's companies consolidation legislation; co-ordination of public consultation and the Board's own advice on the Government's proposals for the role and powers of the Inspector-General of Taxation; and assisting with the Government's forthcoming review of Australia's international taxation arrangements.
Contact:
Fiona Spry, Board of Taxation Secretariat, telephone (02) 6263 4369
e-mail: fspry@treasury.gov.au
