Pitcher Partners Labels GST Backdown A Blow To Business

By Craig Whatman - February 8, 2016

Pitcher Partners’ Craig Whatman today criticised the Turnbull government’s back down on GST-led tax reform, saying that it compromised the ability of government to deliver broader tax reform, including a cut in the corporate tax rate.

“If the rate of GST is not raised, it is difficult to see where the revenue will come from to offer businesses a reduction in the corporate tax rate.

“At 30%, Australia’s corporate tax rate compromises the ability of Australian businesses to remain competitive with their international counterparts. 

“Tax reform may be electorally difficult but it’s critical for Australia’s future economic growth.”

Craig Whatman also expressed concern that without increased GST revenue, businesses would remain bogged down by a variety of inefficient and growth-stunting State-administered taxes.

“If the States and Territories don’t get additional GST revenue they are likely to retain their existing reliance on State taxes which have been proven to be a less efficient means of deriving revenue than the GST. 

“Our middle market clients will therefore continue to be subject to a range of State taxes and levies into the future, including payroll tax, stamp duty and land tax – further compromising their ability to grow and drive economic growth.”

Craig Whatman also pointed out that Australia is bucking the OECD trend of moving towards consumption taxes as a means of raising revenue.

“If GST reform is off the table, Australia will retain one of the lowest rates of GST/VAT in the OECD, which means that we will continue to be reliant on other forms of tax to support the revenue base.

“This is in contrast to the OECD trend, where its members are gradually increasing their reliance on consumption taxes as a source of government revenue.”

“By way of comparison, in the UK the standard rate of VAT is now 20% which has given the UK government the ability to reduce the corporate tax rate to 18% by 2020.”

For further information please contact:

Craig Whatman, Executive Director, Pitcher Partners, 03 8610 5617
Sabine Wolff, Media and Communications Advisor, Pitcher Partners, 0419 529 577

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