Businesses call for reform of GST and payroll tax

Less talk and more action is needed to reform GST and payroll tax, according to a survey published yesterday by accounting firm BDO.

The survey found 95% of the 135 respondents were frustrated by a lack of action on tax reform. 

The chief concern was GST, with 87% of respondents agreeing the GST must be considered in any tax reform discussion.

The complexity of the existing tax system came under fire with 67% of respondents saying “all GST exemptions should be abolished to simplify the system”, while 59% agreed the GST rate should be increased to fund the abolition of state payroll taxes and stamp duties.

Specific comments from respondents point to less lip service and more simplicity. They included: “Simplify the legislation so that it is readily understandable!” and “Simplification! Get rid of low value, high cost to execute taxes.”

Mark Molesworth, tax partner at BDO and author of the survey, told SmartCompany the key issues for SMEs stemming from the survey are GST and payroll tax reform.

“The public has seen a lot of talk about tax reform and what the Australian tax system should look like, but at best we have seen action that is tinkering around the edges,” Molesworth says. 

He says there is a “growing level of frustration” that nothing seems to be happening “after all that talk”.

“There is a large degree of desire for the GST system to be simplified and respondents are happy for that to happen, typically through removing exemptions,” he says. 

Molesworth says the vast majority of those surveyed would prefer to see payroll tax abolished with respondents questioning why businesses should be taxed more for employing more people.

But Molesworth says it is unlikely there will be immediate reform to abolish payroll tax given it is such an important source of revenue for the states.

“As an interim measure we suggest the administration of the system should be simplified for business,” he says.

Molesworth says it is frustrating that there is a different system for each state and territory, with returns which have to be made online further complicated by some of the state revenue authorities only dealing with businesses through certain internet browsers.

“Surely we could have a single payroll tax portal and make one payment in one spot which could then be distributed,” he says.     

Molesworth says while there is a general feeling that the government has made a promising start, it is still too early to tell.

“Actions the government takes following the tax white paper will be very telling.”