Australia Needs to Do More to Boost Revenues
December 17, 2014 Taxation in Australia
CANBERRA – Australia has been criticized for dropping the national mineral resource rent tax, for promising to extend paid parental leave, while not doing enough to boost tax revenues.
The spending plans and tax cuts implanted by the government of Australia may be unsustainable, according to new information released by the Organization for Economic Cooperation and Development in a new report issued on December 17th.
It was noted that Australia is now expected to see a budget deficit, as the prices of the country’s main export commodities tumbles.
In the face of the approaching deficit, the OECD stated the government of Australia needs to expand its fiscal buffer to protect itself from the negative effects of falling commodity prices, and improvements to the tax system are an important way to build this buffer.
Among the changes suggested was a re-balancing of tax burdens away from production and, instead, towards consumption, with a suggestion that the national rate of GST could be hiked to as much as 18 percent without damaging the economy.
Further, tax revenues could be boosted if the government reduced the concessions currently offered on superannuation payments, and if greater reliance was placed on state-based land taxes.
In addition the OECD noted the government has displayed “…over-commitment to costly spending initiatives and tax cuts”, with a specific criticism of the government’s plans for paid parental leave, and the abolition of the mineral resource rent tax.
Photo By: WANG-HSIN PEI