Fed: Business seeks further tax reforms in 2007/08 budget

AAP General News (Australia)
12-21-2006
Fed: Business seeks further tax reforms in 2007/08 budget

CANBERRA, Dec 21 AAP - Australian businesses think tax reform must remain a priority
when the government delivers its next budget, saying some of the forecast surplus should
be returned as tax cuts.

The Australian Chamber of Commerce and Industry (ACCI), the country's largest representative
business organisation, said today the budget should remain in surplus, but some of this
could be returned to taxpayers to boost the economy.

Treasurer Peter Costello lifted his forecast for the 2006/07 budget surplus by $1 billion
to $11.8 billion in yesterday's mid-year budget review, aided by stronger-than-expected
employment growth and large tax receipts from profitably companies, particularly in mining.

In its 2007/08 pre-budget submission, the ACCI said the top 45 per cent marginal tax
rate should be reduced over a number of years to equal the 30 per cent company rate, and
that tax thresholds should be cut to no more than two.

Other reforms include a further reduction in the capital gains tax.

"Larger tax cuts can be funded by reducing the size of government," the ACCI said in a statement.

"ACCI is concerned that the public service grew by 9.6 per cent in the year to July
2006, much faster than general employment growth."

It argues that surpluses are not required to restrict consumption growth. Instead the
government should restrict the growth in its own spending.

It also believes the Australian tax system needs to be more competitive and that surpluses
passed on to the Future Fund is a very poor use of government money.

The Future Fund was set up by the government to cover its unfunded public sector superannuation
liabilities by around 2020.

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KEYWORD: BUDGET ACCI

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