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PwC has released analysis of major taxation reforms from around the globe to bring insight into how Australia can tackle tax reform at home.
PwC reveals how to fix a tax system
15 April 2014
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6 minute read
In the report ‘How do we fix a tax system?’ PwC identifies five key factors that it says help to drive successful reform.
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"These are; building a case for change, active community engagement, securing a mandate for change, balancing the package of reforms and getting the transition right,” said PwC managing partner, tax and legal Tom Seymour.
"2012's Business Tax Working group failed as it had none of these factors, followed closely by the Henry Tax Review, which was unsuccessful as it only contained one key ingredient", added Mr Seymour.
The report also champions the need for reforms, stating that without changes in government spending and revenues, combined annual deficits of Commonwealth, state and territory governments are estimated to rise from $34bn in 2013-14, to $237bn in 039-40 and $627bn by 2049-50.
Mr Seymour said while it may not easy, failing to implement reforms now will cost Australians dearly in the future.
"Any reform is difficult without an imminent and obvious crisis.
"But if we don't fundamentally reform our tax system in the next few years, the crisis we face will be a country with rapidly declining health care services, education standards and a comfortable retirement will be further out of reach for the vast majority of Australians,” he said.
According to the report, if the Government does not adjust income tax brackets average tax payers will move from paying around 21 per cent of their income in personal tax to 34 per cent in 2039-40 and 38 per cent in 2049-50, effectively moving average tax payers from the middle personal income tax bracket to the top tax bracket.
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