A global survey of tax professionals by the Association of Chartered Certified Accountants has deemed Australia's tax system as unfair and complex.
The Association of Chartered Certified Accountants has called on the Rudd government to ensure a fairer tax system for all Australians after a global survey of tax professions deemed the system to be unfair and complex.
The ACCA, who commissioned the research, says tax reform needs to be at the top of the agenda for the Government to ensure a fairer tax system and reduced tax evasion.
The Federal Government recently announced a review of the taxation system, but in order to have a fairer tax system you need simplicity and transparency, which the Australian system doesn't have", ACCA global head of taxation Chas Roy-Chowdhury said
"Australia's taxation report card is not good. Our system is ranked highest in 'complexity' and second lowest in 'fairness' when compared to the UK, USA, Canada, Singapore and Hong Kong.
While the US, Canada, Hong Kong and Singapore rank their tax system as fair, Australian tax professionals believe the system is confusing and doesn't look after the average Australian. With too many complex forms, too many regulations and too many hoops to jump through, the current system is likely to prompt tax evasion.
"The ATO's announcement of a crackdown on Australia's 'cash economy' is one of many 'taskforces' that are announced each year. ACCA's research has found tax evasion can often be linked to a nation's tax system having too many laws and regulations," Mr Roy-Chowdhury said.
Complexity often causes confusion and impacts the public's perception of a tax system's 'fairness'. Rather than launching costly, large-scale taskforces, making Australia's tax system simpler could lead to a reduction of tax avoidance and tax evasion.
"The public needs to understand and believe in the tax system, and currently in Australia this isn't the case. When State and Federal governments come together for tax reform, changes need to be more than surface-deep and look at the real problems of over-regulation in the Australian tax system," he added.
The report finds that historically, many changes to Australia's tax system have been politically-motivated; without long-term analysis as to how changes will add to the system's complexity.
Taxation is a tool to support and pay for the basic functions of government. With Australians not likely to trust the system, the levels of compliance will fall.
"Therefore, it is key that all levels of government are involved in doing something about it now," Mr Roy-Chowdhury said.
During the research, the ACCA conducted focus groups with industry professionals, who believe a step towards simplification would be the removal of the need for the lower paid to complete tax returns.
Results of Perspectives on Fair Tax Report from ACCA:
- Australia ranked the most complex taxation system, followed by the UK.
- The volume of laws and regulations was the number one reason Australians see the tax system is complex.
- The survey found that while Australia's system is complicated information on the tax system is communicated well and is easy to access.
- Accountants believe the government can't justify why there are so many different taxes.
- Overall the respondents from Hong Kong and Singapore held a more positive view of their countries tax system.