In a presentation at the Tax Summit, Peter Costello outlined how his government reformed the tax system, the need to modernise the current system and lessons for the tax system today.
“If you told me 20 years ago I would be standing here today with a GST with an unchanged rate and almost unchanged in base, I would have said you have two heads on you,” Mr Costello said.
He said despite the need for tax reform, getting bipartisan agreement is unlikely, with politicians having to work out alternatives to passing through changes in regulation.
Mr Costello highlighted that the GST that passed parliament was not the idea of the Liberal Party, instead it was “what we could survive the Senate with”.
“Sure, tax reform is much easier if it’s bipartisan, but a lot of tax reform in this country is not bipartisan,” Mr Costello said.
The former treasurer also explained the needs and wants of business people are not actionable without a well-thought solution to tax law.
“You have to fight for it. From time to time, I hear business people saying you have to reform the tax system. But it’s not enough to just say we should reform the taxation system and go home. If you want to reform the taxation system, you need to have a plan,” Mr Costello said.
“I often get asked will we ever see a tax reform as big as this, and here is my answer: No one will ever have to introduce the GST again, and there is nothing as big, because it affects every person on every consumer transaction everyday.”
Mr Costello also believes Australia will never have a tax reform as large as it was in 2000 because the largest reform in history has already been achieved, with future reform simply adding onto existing frameworks.
“If you were to increase the rate or change the base, it’s much simpler as you have the ABNs in place, you’ve got the registrations in place, you’ve got the training in place, you’re just fiddling with the details now,” he said.
“So nobody will ever have to do it again.”
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