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The Financial Services Council is calling for lower corporate tax rates and for the composition of Australia’s taxes to be rebalanced.
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FSC pushes for systemic tax reform ahead of election
23 January 2025
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The Financial Services Council (FSC) is urging the government to reduce and streamline regulation, improve the efficiency of Australia’s tax system and promote investment and economic growth in a report outlining its election policy priorities.
The report has recommended that the incoming government commit to a holistic review of the design of the current tax system.
“This review should consider the most effective tax policy settings to support Australia’s continued economic growth and long-term prosperity and ensure a stable and equitable revenue base,” it said.
The FSC said tax reform has the capacity to reinvigorate growth in the Australian economy through increased productivity and capital investment.
“The financial services industry supports a holistic, evidenced-based tax review which genuinely considers all options for reform as part of a mature policy debate,” it said.
“This is necessary to ensure government avoids the temptation to make ad-hoc changes to superannuation as a substitute for real reform and fiscal constraint.”
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It has urged the government to rebalance the composition of tax as part of a holistic reform package that includes eliminating inefficient state taxes and considering appropriate consumption tax rates.
The FSC also wants to see the government commit to stable superannuation tax and policy settings.
“Superannuation is a cornerstone of Australia's retirement system, providing millions of Australians with financial security and a dignified retirement,” the report said.
“Confidence in the system is being eroded by frequent changes to its tax settings. Tax increases by successive governments, including the introduction of the transfer balance cap, Division 293 tax on high-income earners, regular changes to contribution caps, and more recently, the proposed Division 296 tax on high balances, have created uncertainty for consumers and cost and complexity for the industry.”
Piecemeal tax changes generate poor policy design, it said, such as the proposed application of the Division 296 tax on unrealised gains, taxing Australians on the increase of the value of assets they have not yet sold.
“When Australians contribute to their retirement by saving through superannuation, they do so with the expectation that tax policy settings will be fair and broadly stable.”
“The FSC supports reviewing superannuation tax settings as part of a government tax review, but in the absence of a holistic, evidence-based process, the FSC calls on both parties to rule out changes to superannuation tax changes in the next term of parliament.”
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