In the lead up to the 2022-23 Federal Budget on 29 March, CA ANZ has lodged its pre-budget submission calling for the Australian government to invest in economic recovery, wellbeing for all and measures that make the tax and superannuation system fairer.
The submission to Assistant Treasurer Michael Sukkar highlights that the aim of the Budget should be to build a more resilient country, better prepared for the future Its commitments and investments should improve the outcome of disadvantaged people and have broader measures to contribute to everyone's wellbeing.
After nearly two years of COVID-19 lockdowns, plus bushfires, droughts and floods, measures of consumer confidence declined in early 2022, indicating that the economy still needs more stimulus.
The government needs to prioritise recovery and protect Australians’ wellbeing and future prosperity rather than focus on the financial costs. The Budget should also broaden conventional measures of economic performance, such as GDP, to focus on important societal values, including inequality, the digital divide, social cohesion and environmental quality.
Measures to spur the economy should include extending the low and middle income tax offset (LMITO) beyond 30 June 2022 that would provide many Australians, especially low-income earners, with more cash. Improving businesses’ access to a scheme that allows full expensing of depreciable equipment and carry-back losses would help spur investment.
As some businesses begin to restructure, the government could assist by accepting and legislating all the Board of Taxation recommendations for the transformation of the small business capital gains tax rollover provisions.
To improve equity of the tax system, the government should consider:
- making pay-as-you-go (PAYG) withholding more accurate to help low-income earners with multiple jobs
- replacing the annual superannuation contributions cap with a lifetime contribution cap that is fairer and simpler for all and cheaper to administer
- increasing rental assistance for older Australians
- introducing a domestic GST electronic platform rule to protect the tax base and provide a level playing field for businesses structured differently
- introducing measures to help prevent elder abuse, including encouraging state and territory action
- changing how general and enduring powers of attorney (PoA) operate.
CA ANZ calls for the government to set a clear pathway in the Budget to net zero emissions by 2050. This would provide some certainty for business and encourage investment in low-emissions technology and innovation.
To ensure a just transition to a net zero emissions economy the government will need to consult with all stakeholders, particularly because the costs of the transition will not fall evenly across communities and sectors. It must also take critical steps now to keep up with significant global momentum in corporate reporting standards on climate change and sustainability.
There is a need for tough conversations and decisions to ensure a fair and sustainable tax system for the future. All sides of politics could consider committing to another tax reform review to cover:
- increasing the rate and base of GST
- how the Commonwealth works with state governments, the roles for which these institutions are responsible and how they are funded
- the horizontal equity between individual taxpayers deriving ordinary salary and wage income and those who derive capital gains, especially in a low inflation environment
- bringing any remaining pre-CGT assets into the tax net with a market value cost base so that future gains contribute to general revenue and essential outlays such as aged care
- reviewing tax expenditures to ensure that they are still fit for purpose.
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