The Turnbull government is turning its back on substantial tax reforms just weeks from handing down its first budget.
Last week, Treasurer Scott Morrison confirmed the federal government will not be taking a GST increase to the next election, despite months of Coalition MPs talking about how Australia’s tax system is in need of serious reform.
Because the government is not forging ahead with GST reform, it may no longer have the extra revenue necessary to make big cuts to company tax rates and personal income tax.
Instead, the government is now looking at minor changes to superannuation contributions and negative gearing, according to Fairfax.
The changes will likely see a cap placed on the amount of losses people with negatively geared properties are able to claim, as well as a cap on the amount of pre-taxable income able to funnelled into super.
Meanwhile, the federal opposition has already announced a plan to restrict negative gearing to newly-constructed homes.
Small business community frustrated
Speaking to SmartCompany this morning, Peter Strong, executive director of the Council of Small Business of Australia, said he is disappointed the government appears to not be taking the opportunity to pursue major tax reforms.
“All my members are saying it is disappointing after all this talk and then nothing,” Strong says.
“We’re going to keep on their backs.”
Strong says if the federal government isn’t going to pursue a company tax cut, the other option is for government to “spend its money better”.
“Certainly in vocational education and training, the money is being wasted,” he says.
“They can still make changes to small business with better expenditure of funds and ease of paperwork.”
A bipartisan approach needed
Mark Harrison, partner at Pitcher Partners, said in a statement this morning it is disappointing to see politicians take a minimalist approach to tax reform.
“Over the past two months we’ve seen the government back away from every major tax policy position they’ve held, with the exception of tinkering with negative gearing, capping super contributions and reducing tax rates for middle income earners,” Harrison said.
“This does not constitute tax reform. The government seems to have confused tax reform with a politically motivated, politically safe strategy aimed at fending off criticism from the opposition.
“What Australia needs is genuine, bipartisan commitment to tax reform – business, employees and the government accounts can’t afford this political wrangling.”
The federal budget is due to be handed down in May.