2016 will be an interesting year for tax reform. It is an election year. The earliest date for a standard House of Representative/Half Senate election is 6 August 2016, although it would be possible for an early House only election or a double dissolution. It is also technically possible that the election be delayed until 14 January 2017, but the Prime Minister has indicated that the election is likely to be in September or October.
Tax reform and election years are not traditionally an easy mix, but there may be some cause for limited optimism this time. Firstly, the timing and process for a ‘Green Paper’ for the first half of this year appears to be already set. It would seem likely that the Green Paper is conflated with the White Paper such that there is only one ‘Government position’ paper.
Secondly, the Government appears to be doing well in the polls. It may have the political capital for tax reform now. However, that political capital may diminish in the next parliamentary term as ‘holding on to power’ at a 2019 election may dominate the Government’s thinking.
Thirdly, the decision in the 2014 Budget to limit Federal funding to States on health and education to consumer price index (CPI) and population increases will begin to ‘bite’ in the next term, both financially and politically, suggesting a solution earlier rather than later may be electorally expedient. This problem is at the heart of various State premiers and Treasurers calling for an increase in the GST base or rate.
Finally, both the Prime Minister and the Treasurer present themselves as ‘fix it’ political actors. It may be easier for them to do more rather than less given how they are trying to place themselves in the political arena.
The next Council of Australian Governments (COAG) meeting to be held in Sydney, Australia in March 2016 will be critical for the scope and level of ambition in the tax reform program.
I hope 2016 is the year of opportunities grasped, rather than missed. As Brutus said,
There is a tide in the affairs of men.
Which, taken at the flood, leads on to fortune;
Omitted, all the voyage of their life
Is bound in shallows and in miseries.
On such a full sea are we now afloat,
And we must take the current when it serves,
Or lose our ventures.
Shakespeare, W. Julius Caesar Act 4, scene 3, 218–224.
KPMG has launched a state of the art digital platform that enhances your experience and provides improved access to our content and our people, whatever device you are on.