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Chan & Naylor has urged the government to look further than just GST reform to restore confidence and boost productivity in the economy.
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Chan & Naylor calls for wider economic action
29 December 2014
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Ken Raiss, managing director at Chan & Naylor, said that the federal and state governments must also contemplate the state taxes and duties that the GST was originally set up to replace.
“We need to review the GST and how it is allocated, which does not necessarily mean increasing the rate or the base of the tax,” said Mr Raiss.
“Treasury should look instead at increasing the co-operation between the states and review regressive taxes such as stamp duty, land tax and pay roll tax, which are all disincentives to employment and productivity.”
Mr Raiss said that as the Australian economy inevitably recalibrates back to growth, so too will the rate of money going through the fiscal system if the government adopts a more commercial approach to ‘growing the pie’. However, he said there are more immediate issues that need to be addressed, including reigning in expenditure and managing the increasing and unsustainable welfare net coupled with a nervous superannuation and saving regime.
“Australia requires stable and sensible regulations for SMSFs, labour, banking and tax as well as incentives and investment to encourage national productivity. It is this combination that will grow confidence to generate spending, business cash flows and employment,” said Mr Raiss, who reiterated his view that the Abbott government must start operating as a business with a social conscience if it is to increase Australia’s productivity and long-term wealth.
“The government should be setting the nation up for hope and increased confidence rather than disillusionment,” said Mr Raiss. “We need to focus on restoring the health to the vital organs of a functioning economy, namely employment, growth and sustainability. This means encouraging small and big business to expand and grow through innovation and employing aspirational Australians.”
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Mr Raiss also believes that Australia has been too rigid and slow to adapt to changing circumstances and argues that a carefully considered band of interest rate increases tied to an improving economy, rather than cuts combined with the introduction of government policies that stimulate business activity, could help set the framework for improved consumer confidence, sustainable employment and investment conditions.
“A future rate rise may make borrowing more expensive, but enlightened homeowners who have jobs will be happy to pay this slight impost with a strengthening economy so as to contain excessive growth and activity, as will those who depend on their income and living standards from higher interest rates,” Mr Raiss said.
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