The Commonwealth Government’s response to the Dr Ken Henry’s Review into Australia’s Future Tax System, released to the public on Sunday May 2, 2010 has been described as “a timid first step towards serious tax reform” by the Institute of Chartered Accountants in Australia.
The overarching objective of the Henry review was to build a stronger, fairer and simpler tax system to meet the challenges that lie ahead. While Dr Henry has delivered on what was asked of him, the Government has addressed only a handful of Henry’s recommendations.
Alan Kohler describes it this way: the Government is proposing to adopt 1.75 of Henry’s 138 recommendations, or slightly over 1 per cent. The Resource Super Profits Tax is one of the Henry recommendations, but the cut in the company tax rate represents only about a quarter of the recommendations about company taxation, and the small business concessions are about a half of what’s proposed.
The centrepiece of the Government’s response is a new ‘super profits’ tax on resources projects along with a boost to the superannuation guarantee and a cut in the company tax rate.
All commentators seem to agree the government’s response to the Henry Review is “short term, election year politics”; a missed opportunity to attempt real tax reform.
It will be interesting to see the debate unfold over coming weeks and months.
