Tax shake-up urged by global body ahead of budget
A global financial institution has called on the federal government to implement tax reform as the Australian economy undergoes a “soft landing”.
In its latest report, the International Monetary Fund (IMF) praised the Australian economy’s handling of difficult conditions as inflation pressures returned.
“Executive directors welcomed Australia’s progress towards a soft landing and domestic stability,” the report said.
“Australia’s strong institutions, flexible markets, agile policy toolkit and flexible exchange rate position the country to manage external risks from trade policy uncertainties and tighter global financial conditions.”
The report comes after a rise in inflation led the Central Bank to raise interest rates.
The IMF called on the federal government to find other ways to improve the financial situation.
“(Administrators) promoted comprehensive tax and spending reforms while protecting and prioritizing infrastructure investments to increase productivity and support growth,” the report said.
“Executives emphasized the need for a holistic strategy to address housing supply constraints and emphasized the implementation of supply-enhancing measures and tax reforms.”
The fund also called for increasing the 10 per cent GST rate, reducing the company tax rate and increasing taxes on resources.
Finance Minister Jim Chalmers is expected to announce a 50 per cent reduction in capital gains tax in the May federal budget.
But the treasurer said the government had not changed its tax cut plans.
“We know there are generational issues in our economy and our budget. We are dealing with those in other ways,” he told ABC radio on Monday.
Dr Chalmers said the funding report was an indication that the federal budget was moving in the right direction despite global headwinds.
In his statement, he said, “The IMF’s report shows that our economic agenda, consisting of easing living costs, budget repair and economic reform, is the right approach.”
“The IMF described the government’s reform agenda as ‘bold’ and recognized our efforts on many fronts.”
The report also called for better relations between the federal government and the states and territories.
“Directors also recommended improving fiscal coordination across the federation and regular monitoring of sub-national fiscal positions,” the report said.
Despite the praise in the fund’s report, Dr. Chalmers said more study needed to be done.
“There are some ideas in these reports that we may or may not agree with and will not put into practice,” Dr Chalmers told ABC radio.
“But this IMF report was largely a very positive report about Australia and the government’s economic plan.”
Australia’s Associated Press is the beating heart of Australian news. AAP is Australia’s only independent national news channel and has been providing accurate, reliable and fast-paced news content to the media industry, government and corporate sector for 85 years. We inform Australia.
