Tax white paper ‘casualty’ of leadership crisis

Tax white paper ‘casualty’ of leadership crisis

Speculation is mounting that the release of the tax white paper, which was originally set to target super tax concessions, will be heavily delayed or potentially called off in light of the leadership crisis currently facing Prime Minister Tony Abbott.

As part of the government’s broader plan to reform the national tax system, the tax white paper was set to target super concessions afforded to high-income earners.

However, in light of the recent leadership spill motion and continued speculation over the future of the prime ministership, tax consultant and former senior ATO director Mark Chapman told SMSF Adviser he wouldn’t be surprised if the government delayed the release until their second term.

“I think everything that has happened over the last month and particularly the last week probably indicates that this government is going to be very risk adverse for the remainder of its term,” Mr Chapman said.

Mr Chapman also agreed it’s “very likely” the tax white paper could be delayed indefinitely and that original intentions to address tax concessions afforded to superannuation could be toned down.

“They’re not going to want to touch the superannuation system because again the people who lose out always scream louder than the people who win, and there will be a lot of people who would lose out from changes in superannuation in terms of reducing concessions there,” Mr Chapman said.

The Institute of Public Accountants’ senior tax adviser Tony Greco told SMSF Adviser the tax white paper might be seen as “too aggressive” to release or discuss in the current political climate.

He also expressed concern that the tone and arguments of the white paper will be softened to avoid political ramifications.

“What we thought would be very wide encompassing might be not be as wide and encompassing and then we fall into the dilemma of the Henry Review in that things like GST were excluded," Mr Greco said. 

“What we’re all asking for is the big macro policy setting stuff to be covered – most commentators will say that our tax system belongs in the 1950s.

“I think politicians might be a little bit gun-shy in going to the public and saying what should be said. So we’re in this dilemma now of what are the politicians going to? Do they want to risk political capital by stating the obvious? I think [the white paper] will be a casualty of the politics."

Tax reform on a national scale is crucial to the “prosperity and competitiveness” of Australia and the current leadership issues in the Liberal party shouldn’t be used as an excuse to delay the release of the tax white paper, Moti Kshirsagar, chief executive of Taxpayers Australia told SMSF Adviser.

“It is clear our current system is not optimal. The proposed tax white paper can set us up for the government and society of the 21st century. The government needs to be seen to be leading the debate. Any move away from its commitment to tax reform will be a missed opportunity,” he said.

Tax white paper ‘casualty’ of leadership crisis
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