Federal Budget 2025: Who needs tax reform when there’s an election to fight?
Federal Budget 2025: Who needs tax reform when there’s an election to fight?
A pre-election budget with a cash splash towards tax cuts and cost-of-living measures with no commitment to real tax reform leaves the country staring down a budget blackhole, says BDO in Australia.
Mark Molesworth, Tax Partner at BDO in Australia, says the government’s decision to focus on short-term gains on the eve of a Federal Election ignores growing deficits.
“It’s a standard pre-election budget with the sprinkling of money across the masses with tax cuts, energy bill rebates and HECS/HELP relief, leaving nothing in the tin for the Opposition to spend,” said Mark.
“There's certainly no big picture tax reform, no big picture reflection about the future of the Australian tax system in it, and not even a study to look into the future of the Australian tax system.
“Holistic tax reform is vitally important to ensure that the tax system in Australia is fit for purpose in collecting sufficient tax revenue to fund essential government activities, while maintaining Australia’s attractiveness as a destination for business and investment, and in maximising productivity.”
Instead of revenue raising measures, the government has instead committed nearly $1 billion to the Australian Taxation Office (ATO) to recoup $3.2 billion by extending and expanding tax compliance activities.
“Taxpayers, from large multinationals to salary and wage earners, should brace for more visits from the ATO,” said Mark.
“From a revenue-raising perspective, it’s only going to raise $3.2 billion a year which is less than 1 per cent of the total tax take.
“That alone is not going to be enough to sustain the growing list of spending initiatives that have been set out tonight.
“Without a commitment even to think about reform of the tax system, the question must be how long Australia can continue on this path.”
For more information:
Jotham Lian
Manager, Media
BDO in Australia
jotham.lian@bdo.com.au
Jane Ward
Senior Manager, Media
BDO in Australia
jane.ward@bdo.com.au