Introductory remarks
Thank you for that kind introduction and for inviting me to join you today.
I would like to thank our hosts Wolters Kluwer and CCH and Frank Drenth and the Corporate Tax Association for facilitating today's event.
It is great to be able to talk directly to tax experts in many of Australia's large companies — and of course the specialist tax advisers here today.
I recently addressed the sister event hosted by CCH in Sydney. Today's speech is an updated version of that address with a few more contemporaneous observations.
Tax reform has been a major priority for our Government.
We initiated the Henry Review, which set out the principles that will guide tax reform in Australia for years to come.
We convened last year's Tax Forum to continue the conversation about tax reform started by the Henry Review.
Since then, we have set up a number of groups to keep that conversation going, including: the Superannuation Roundtable, the Not-for-Profit Sector Tax Concessions Working Group and the Business Tax Working Group.
I am sure that you are all keenly aware of the work of the Business Tax Working Group over the past 12 months.
I would like to start today by talking about why we set up the Working Group and the role it has played in the broader national discussion about tax reform in Australia.
I would then like to touch on the progress that we have made in reforms to Part IVA and to the transfer pricing rules – two issues that I know are of interest to large corporate taxpayers.
Something that I think these reforms and the Business Tax Working Group process reinforce is the importance of consultation. As I have said on a number of occasions, the Government is committed to the continuous improvement of our consultation processes.
I would like to conclude today's speech with a few remarks on some of the recent commentary around proposals by the States for tax reform.
Business Tax Working Group
The Business Tax Working Group came out of last year's Tax Forum. The Treasurer established the Working Group to bring together different perspectives on how to reduce the tax burden on new investment.
The Government recognises that new investment will be vital for Australian businesses as they adapt to the broader economic transformations happening across our economy and look for ways to improve their productivity.
And as we all know, lifting productivity will be crucial for raising living standards and maximising the opportunities for all Australians into the future, especially as we seek to embrace the Asian century.
So it is important that we get the policy settings for new investment right – this involves cutting red tape where we can and it also means looking at the role of tax, and in particular the company tax rate.
As I am sure all of you are aware, the Government is tightening its belt in a number of areas, and the cost of any new policy reform needs to be offset. This is no different for business tax reform.
This is why we asked the Working Group to identify savings from within the business tax system to fund a reduction in the company tax rate.
I would like to take this opportunity to address concerns that have been raised by some corners of the business community and the media around this revenue neutrality requirement — the strongest being that the Working Group was 'set up to fail'.
Frankly, this argument ignores that many business representatives argued at the time for a process to look at cutting the corporate tax rate, which could be funded by broadening the business tax base.
Some submissions to the Working Group proposed exactly that.
And let's not forget that The Review of Business Taxation in the 1990's – commonly known as the Ralph Review – was subject to a similar constraint and came up with a package to broaden the base and cut the company tax rate.
In fact, it is difficult to remember a time in Australia when the corporate rate was cut without being accompanied by a broadening of the business tax base.
Another concern seems to be that this revenue neutrality requirement would mean reform is 'pointless'.
It is worth noting that this seems to ignore decades of research about the potential benefits of taking a 'broad base, low rate' approach and the importance of the company tax rate to Australia's international competitiveness.
The criticism of the Working Group's terms of reference fails to recognise that how tax dollars are raised does matter, especially in terms of the impacts of a tax on efficiency.
These criticisms also seem to rely upon the notion that the broader community will accept higher taxes on nonbusiness taxpayers or reductions in government expenditure, and consequently fewer government services, in order to fund a company tax cut.
This is even more difficult to understand when some of the business groups calling for company tax cuts are, at the same time, calling for Government to increase welfare commitments without any obvious productivity enhancement by increasing dole payments to the unemployed.
There is, as they, no magic pudding.
I would suspect, that if advocates of reform are awaiting such an alignment of the stars before tax reform can be achieved, they may be waiting a long time.
The Working Group approached its task open to the potential benefits of further pursuing a 'broad base, low rate' reform.
This was an opportunity for the business community to consider whether, and if so, how a cut in the company tax rate should be pursued.
The Working Group's preliminary view was that a lower rate, broader base package could deliver net benefits. It identified base broadening options that, if adopted, could have funded a rate cut of two to three percentage points.
However, the feedback to the Working Group was clear — many businesses that would have been affected by the base broadening options asserted that they would have been worse off under the trade‐offs canvassed.
And few in the business community that stood to benefit from a company tax cut came out and advocated for a change.
As a result, the Working Group found that there was no consensus for a corporate tax rate cut funded from within the business tax system.
Nevertheless, the Government remains supportive of a lower company tax rate if consensus can be reached in the future about how it can be funded from within the existing business tax system — in a way that has the support of the Parliament.
While the Government is disappointed with the Working Group's failure to achieve a consensus position on approaches to cutting company tax rates, it should be acknowledged that the Working Group played an instrumental role in advocating for the introduction of the new loss carry back measure, which was announced in this year's budget and will soon be introduced into Parliament.
Part IVA – anti-avoidance provision
As corporate tax managers, the operation of Part IVA, the general income tax anti-avoidance provisions, will no doubt be an issue of particular interest to you.
As you would be aware, the Government is working on amendments to Part IVA.
As a former tax lawyer and now the responsible Minister, let me assure you that I understand the importance of Part IVA in the system and therefore the sensitivity of these changes.
We consider that amendments are necessary to ensure that Part IVA operates as it was always intended to operate. That is, to counter arrangements carried out in an artificial or contrived way to avoid tax.
Our focus here is on lawful conduct carried out in an artificial and contrived way to prevent a liability to tax from arising that would have arisen if the form of the transaction had matched its substance. Part IVA operates to expose the substance of the transaction to the ordinary operation of the taxation laws.
Tax avoidance can and should be distinguished from legitimate tax mitigation. Legitimate tax mitigation involves a taxpayer taking advantage of a choice offered by the tax law in circumstances where the taxpayer genuinely engages in the activity or experiences the economic consequences that Parliament intended to be engaged in or experienced by those making that choice.
Of course it is easier to express this distinction in the abstract than it is to identify it in practice. Blatant tax avoidance is not so problematic – for example – it's not so hard to identify tax avoidance when confronted with a highly complex arrangement involving multiple steps that, put together, serve no apparent commercial purpose. In those cases, the arrangements as a whole are obviously artificial and contrived.
It's another question again, when what is artificial or contrived is no more than a step or steps within a broader commercial arrangement. In those cases, the dividing line between avoidance and legitimate planning can be difficult to discern.
Broadly speaking, the Government thinks the dominant purpose test in Part IVA is working effectively to distinguish tax avoidance from legitimate planning. That is, we think it currently gets the balance about right. That's because Part IVA requires an examination of whether, having regard to eight objective matters, including the form and substance of an arrangement, it could be concluded that the arrangement was entered into, in the particular way it was, for the sole or dominant purpose of obtaining a tax advantage.
As such, Part IVA does not inquire into the subjective motives of taxpayers. It does not therefore strike at every arrangement that is entered into with an eye to tax minimisation.
The bare fact that a taxpayer pays less tax if one form of transaction rather than another is made does not demonstrate that Part IVA applies. Tax is a cost of doing business and it would be expected that it will be taken into account in commercial transactions.
Rather than focusing on a taxpayer's motives, Part IVA focuses on the way in which an arrangement is carried out. The intention is that it should strike at arrangements that have unnatural and contrived features that are explicable solely or principally by the desire of a person to produce a tax advantage. That is, at arrangements that are dressed up to be something that they are not. This includes arrangements that, viewed as a whole, achieve discernible commercial ends. As the courts have observed, it is a false dichotomy to suggest that a particular course of action cannot be "both 'tax driven' and bear the character of a rational commercial decision".
In the Government's view, the problem with Part IVA is not with the operation of the purpose test. That is why I have made it clear, publicly, that we are committed to maintaining the 'core operation' of the dominant purpose test.
In the Government's view, the problem is with the way in which Part IVA goes about identifying and measuring the 'tax advantage' secured by an arrangement entered into for the purpose of avoiding tax.
That is — to use the language of Part IVA — how it identifies and measures the 'tax benefit'.
Simply described, Part IVA measures the tax benefit secured by an arrangement by comparing the actual tax position achieved by the arrangement with the tax position associated with a comparator arrangement – often referred to as the counterfactual.
The difficulty lies in the way in which the counterfactual is being ascertained. Recent decisions confirm that the counterfactual is to be identified by a hypothetical inquiry into what else the taxpayer would have done if it had not entered into the scheme.
As a result, the counterfactual does not have to be another way in which the substantive results of the scheme, if there were any, might have been achieved. The consequence of that is that taxpayers who enter into arrangements in a particular way, with the dominant purpose of avoiding tax, appear able to escape the operation of Part IVA simply by demonstrating that they would not have entered into the arrangement if they had known it would attract tax. For example –they might argue that they wouldn't have done anything at all or they would have done something with a different substantive effect from the arrangement that they actually entered into.
This was never intended by Parliament. In the Government's view, this is a technical deficiency in the definition of 'tax benefit' that has the potential to undermine the effective operation of Part IVA.
The amendments we are proposing to Part IVA are targeted at this problem and this problem alone. Taxpayers will not be affected by the amendments unless they participate in arrangements for the sole or dominant purpose of obtaining a tax advantage.
Having said that, I am aware that taxpayers and advisers alike are concerned about any change to Part IVA.
That is why the Government has made it clear from the outset that we would consult on how to implement the policy without causing any unintended consequences.
And it is why I have put a comprehensive consultation process in place to ensure that the vast majority of taxpayers who do the right thing and pay their fair share of tax would not be inadvertently affected by any changes.
Treasury conducted a series of roundtable discussions with industry representatives, legal experts and academics to identify and explore possible approaches to clarifying the law. As part of this process, Treasury also sought advice from senior tax barristers with expertise on Part IVA.
Once we have settled on a preferred approach to clarifying Part IVA, we will consult on the draft amendments, through the usual Treasury public consultation processes for draft taxation legislation.
I know that some might like to see the amendments implemented more quickly. But, given the complexity of this area of tax law, it is important to recognise that hurrying the consultation process would pose unacceptable risks to the quality of the final outcome.
We have taken the time to make sure that the change is right the first time.
Reform of Australia's transfer pricing rules
Australia's transfer pricing rules play an important role to ensure that multinational firms pay their fair share of tax on profits in Australia.
This taxation is based on an amount of income which reflects the economic activity attributable to Australia and is determined in accordance with internationally accepted approaches.
As I'm sure you know, the Government announced in November 2011 its review of Australia's transfer pricing laws. This will ensure that our rules align with international best practice as set out by the OECD.
We are implementing this in two phases.
The first phase ensures the law operates in a way that is consistent with the Parliament's long-held understanding and widely disseminated ATO guidance material that treaty transfer pricing rules apply to provide assessment authority in treaty cases. The first phase amendments received Royal Assent on 8 September 2012.
I know that there are strong held views about those changes — and that applying the amendments back to 2004 was controversial.
I want to emphasise that the potential impact on taxpayers was carefully considered. Importantly, these provisions can only apply where a tax treaty is applicable and therefore a party affected by these measures will be able to access the treaty mechanisms designed to relieve any double taxation in the unlikely event that it arises. Evidence provided to the Senate Economics Legislation Committee on this point demonstrated the excellent track record of Australia in successfully resolving any issues of this nature with our treaty partners.
It is important to note that settled cases won't be reopened as a result of these amendments.
And the Tax Office has publicly stated at the highest levels that it will not change its approach to transfer pricing cases as a result of the amendments, precisely because the amendments are entirely consistent with the Commissioner of Taxation's long held and publicly expressed view of the law.
The need for reform
But I want to talk today about the second phase to reform Australia's transfer pricing laws.
Several factors led to the Government's announcement to review Australia's transfer pricing laws, including:
- First, International thinking and business practices on transfer pricing have evolved significantly since the laws were introduced in 1982.
- Second, In 2010 the OECD released revised Transfer Pricing Guidelines for Multinational Enterprises and Tax Administrations.
- Third, recent transfer pricing cases such as Roche and SNF have highlighted areas of uncertainty in the existing law.
Second Phase: Towards International best practice
With phase one of the transfer pricing reforms now passed by the Parliament, the second phase of the reforms is well underway. I will be releasing exposure draft legislation for public consultation in the near future.
This will be a wholesale modernisation of Australia's transfer pricing regime.
The reforms will provide certainty by aligning Australia's transfer pricing law with the most recent benchmarks of international best practice as set out by the OECD.
The OECD's revised Transfer Pricing Guidelines released in 2010 contained a number of changes to the internationally accepted approach to transfer pricing.
At the core of these Guidelines is the arm's length principle.
To be consistent with the arm's length principle, the Australian transfer pricing rules should ensure that cross-border profits attributed to the Australian tax base appropriately reflect the economic activity undertaken by Australian operations. Broadly, tax should be based on an arm's length return for Australia's economic contribution.
This economic contribution is measured through an analysis of the functions performed in Australia, the assets used or contributed by Australian operations, and the risks assumed on the Australian side.
In making this analysis, aligning our laws to the international benchmarks of the OECD will reduce uncertainty, minimise compliance and administrative costs and reduce the risk of double taxation — thereby facilitating international trade and investment.
Countries around the world recognise the benefits of a consistent approach to cross-border transfer pricing. Australia's major trading and investment partners look to the OECD material on transfer pricing to provide that consistency.
This has been our longstanding practice. The proposed reforms are aimed at achieving this by requiring that our domestic transfer pricing rules be interpreted as consistently as possible with the OECD guidance on transfer pricing.
The second phase reforms also aim to increase efficiency and certainty for taxpayers in a number of ways. Most notably, the rules will now apply on a self-assessment basis. So whereas the current rules operate on the Commissioner's determination, the new transfer pricing regime will be consistent with the self-assessment approach underlying other income tax rules.
As part of this, the Government is giving serious consideration to introducing a time limit on the Commissioner's power to amend assessments.
This reflects the recommendations of The Review of Unlimited Amendment Periods in the Income Tax Laws (2007) and The Report on Aspects of Income Tax Self-Assessment (2004).
Any change will need to balance the benefits of added certainty to taxpayers with the need to provide an adequate time for the Commissioner to conduct transfer pricing risk reviews and audits where necessary.
The benefits of consultation
In designing the transfer pricing reforms to date, the Australian Government has consulted widely with industry and community groups. The Government has made it a priority to consult stakeholders on broader policy issues, as well as on specific measures—and the Government has engaged extensively with business and the community in relation to the transfer pricing reforms.
The consultation process has delivered considerable benefits in relation to the design of the phase one amendments, for example in relation to clarifying the link between the transfer pricing and thin capitalisation rules. This was something that was strongly called for by business and tax practitioners.
And in our discussions so far with industry and the community, there appears to be broad support for the phase 2 reforms.
I encourage you all to participate in the upcoming consultation.
Consultation Process and Forward Work Program
Introduction
I would next like to speak to you about community involvement in setting priorities for tax reform and during the process of policy and law design.
I've spoken before about the high priority this Government has placed on tax reform. But this Government has also placed a high priority on improving the process of designing taxes.
Within three months of coming into office this Government set up a Tax Design Review Panel to examine the ways tax law quality could be improved through better community consultation. The Panel was also charged with examining methods to increase community input in prioritising tax law changes.
The Government accepted in principle all 26 of the Panel's recommendations, contained in its 2008 report, Better Tax Design and Implementation.
In September this year, I released the Board of Taxation's Post-Implementation Review into the Panel's recommendations. This report outlined the improvements which have been made as a result of our acting on the Panel's recommendations.
Community input into setting priorities
The Government has also made efforts to increase community involvement in setting priorities for law changes.
In many ways, these efforts began when the Government established the Henry Review in 2008. The Henry Review received over 1,500 submissions and over 4,600 items of correspondence. In addition, the members of the review panel attended stakeholder events across the country and separately met with over 130 stakeholders.
And last year's Tax Forum is another example of sharing views. It brought together around 180 participants, including representatives of business and community groups, tax practitioners, academia, state and local government, unions and the superannuation industry.
More recently, I have announced that I will be holding twice yearly meetings with the Joint Professional Bodies. I am hoping to convene the first of these meetings in December. Among other things, these meetings will enable the Government to better understand the practitioner community's top priorities for tax reform. These meetings will also enable the Government to provide feedback about the Government's own priorities for tax reform.
Since February 2009, Treasury has been releasing a Forward Work Program on tax measures on its website. The Program sets out the consultation currently being undertaken and the consultation planned in the months ahead. This document provides an indicative timetable to assist the community in responding to consultations the Government is undertaking. Treasury now publishes this Program on a monthly basis.
Purpose of consultation
In addition to increasing community input into setting priorities, the Government has made significant efforts to increase community consultation on specific tax policies and tax law.
Consultation plays a vital role in Government decision making. In a complex area like tax law it is particularly valuable.
When developing policy, consultation can assist the Government to understand the commercial and practical issues relevant to particular industries. This can provide the Government with a broad understanding of the options for reform.
When designing law, consultation can draw on the expertise and knowledge of people who deal with the law on a day-to-day basis. This can improve the design and quality of the tax law and help to ensure it reflects the stated policy intention of the Government.
Tailoring consultation – public and targeted consultation
Most tax law changes affect a wide range of stakeholders. Therefore consultation is typically most beneficial when conducted publicly. That's why public consultation is this Government's default position for consultation on policy development and law design. This ensures that all stakeholders have the opportunity to contribute to the improvement of the tax system.
It is sometimes taken for granted that consultation on tax policy and legislation is the norm. But it is worth remembering that up until the early 2000s consultation was infrequent and largely confined to administrative matters.
But not all tax law changes are the same. Each has its own characteristics. And each consultation process should be tailored to these characteristics.
Sometimes law changes only affect a particular industry, or a particular group of taxpayers. In these circumstances, targeted consultation can enable a greater depth of consultation with affected parties.
Complex changes require comprehensive consultation - Part IVA
The complexity of a tax law change will also help determine the optimal consultation process. As I have already outlined today, the change being made to Part IVA of the 1936 Income Tax Assessment Act is one example of change in a particularly complex area of tax law.
I talked about Part IVA earlier, but I want to elaborate briefly on the consultation process the Government put in place.
Consultation on Part IVA has taken place in three stages. Firstly, the Government undertook targeted consultation before deciding to make a change. Secondly, I established an expert roundtable to provide advice on the implementation of the change. The roundtable comprises legal professionals, academics and representatives from tax and accounting bodies. The advice of the expert roundtable is complemented by advice provided by senior tax barristers. And lastly, the Government will undertake public consultation on an exposure draft of the amended Part IVA legislation. I look forward to seeing any views you might have once this exposure draft is released.
Consultation before decisions are made – Business Tax Working Group
Sometimes there can be benefits in consulting early, before the Government makes a decision. This is particularly true when there is an exploration of new and complex proposals or major reforms.
However, the Business Tax Working Group has shown that early and widespread consultation is not always universally welcomed, especially where particular industries and sectors believe that such a process may lead to decisions being taken that may not be entirely favourable to them.
The Working Group process also shows that early consultation does not mean that everyone will be able to get what they want.
Nonetheless, the Working Group was open and transparent in engaging the wider community on these important issues.
Shared responsibility
Since entering office, the Government has made significant efforts to improve the involvement of the community in the tax design process. And I believe that the increased participation of the community brings significant benefits by leading to more enlightened decision making by the Government.
But this can be subverted when participants are not open and honest, or in the extreme when participants misrepresent the commercial and practical effects of a proposed tax change in what can often become an exercise in rhetorical brinkmanship. While some participants may see benefits from this in the short run, the possibility of a need for future revisions down the track can lead to an environment of greater uncertainty for all.
Increased participation in the tax design process brings with it increased responsibility. The responsibility for the health of the tax system is shared by all participants.
As such, participants need to come to the table with more than just their clients' or shareholders' interests in mind.
Consultation also does not automatically mean that stakeholders will get everything they want out of that process. The job of government, in the end, is to make decisions that weigh up the interests of a wide range of stakeholders and that deliver balanced outcomes.
Participants need to be mindful of this reality and their own duty to progress the national interest, not just sectional interest. Whether during consultations or engaging in public debate, we all have to make a commitment to be upfront and honest with each other. The tax system belongs to all of us. And those with the skills and expertise have a responsibility to maintain and to improve the tax system, for the benefit of all Australians.
The Board of Taxation addressed this issue in their recent report on the tax design process. The Board recommended that, at the outset of consultations, the Government obtain a commitment from all stakeholders to seeking good tax system outcomes. The Board also recommended the Government consider developing an explicit ethical framework for participants in the tax design process.
Recently, in an address to the Tax Institute Queensland Corporate Retreat, I invited the tax community to provide me with any ideas on what an ethical framework might look like in practice. I would like once again to extend this invitation to all of you and in particular invite you to provide me with any ideas about how such a framework might apply to corporate tax managers.
I am looking forward to discussing this issue at the first of my twice yearly meetings with the Joint Professional Bodies.
There is more I could say on the subject of consultation but I will summarise by saying that the Government is committed to continuously improving community involvement in policy development and law design processes, and in setting priorities for tax reform.
Tax Reform proposed by the States
I want to talk briefly about some of the recent debate about tax reform proposals by the States.
It almost goes without saying that everyone agrees that stamp duties are some of the most inefficient taxes in Australia.
This was pointed out by the Henry review, and was discussed at length in the 'State taxes' session at last year's Tax Forum.
During the Tax Forum, NSW Treasurer Mike Baird and then Queensland Treasurer Andrew Fraser agreed to look at ways to harmonise State taxes and also to develop plans for State tax reform to bring to COAG for discussion.
South Australian Treasurer Jack Snelling stepped in for Andrew Fraser following the Queensland election in March this year.
Some commentators and newspapers were disappointed that I criticised as 'ludicrous' and 'ham fisted' a plan reported in the media last week to halve stamp duties.
Let me be absolutely clear, I support the efforts of the States to work together to bring forward sensible proposals for tax reform, especially where those reforms would reduce the States' reliance upon stamp duties. But what I was deeply critical of were some of the reported proposals being considered to fund stamp duty reductions.
First, these reports suggest that this plan would only achieve a halving of stamp duties, not their removal.
Second, the Federal Government has repeatedly said that, in the first instance, State tax reform should be funded by the States through a rationalisation of their own tax bases.
Let's not forget that both the tax review and the Tax Forum recognised that the States have some of the most efficient taxes in the country – far more efficient than personal and company income taxes.
Unfortunately, for some of our State Treasurers, tax reform automatically equates with them seeking more Federal dollars.
The argument that the States seem to be mounting is that since the Global Financial Crisis they have not been receiving the increases in GST funding that they were previously expecting and therefore should have access to additional Federal funds.
This argument ignores the fact that GST revenues handed over to the States are still increasing and more importantly, it ignores the fact that Commonwealth revenue has been written down by $170 billion as a result of the GFC and its after-effects.
As the Deputy Prime Minister and Treasurer has put it, "we can't all give ourselves a tax cut and expect somebody else to pay it for us."
In this regard, the ACT Government should be commended for showing that it is possible to develop a progressive plan to phase out stamp duties over time without coming 'cap in hand' to the Federal Government.
Chief Minister Gallagher's government should be congratulated for this. It is worth making the point that some of these reforms have been difficult politically, but tax reform has never been easy.
My most strenuous criticism is focused on two particular proposals that are reportedly being considered by the States. The first is a proposal to hypothecate the proceeds of 'bracket creep' to provide the States with what is supposedly a more sustainable revenue base. The second proposal involves a quarantining for the States of any corporate tax paid by former State Owned Enterprises once they have been privatised.
The proposal to lock away the proceeds of bracket creep for the States would be a disaster.
Firstly, it would severely hamstring the ability of future Commonwealth governments to undertake personal income tax reform to reduce the increasing tax burden over time on households as a result of the eroding impact of bracket creep.
By entrenching 'bracket creep' in this way, the States would become permanent opponents of personal income tax reforms and they would have a vested interest in preserving the ongoing effects of bracket creep. This would sap incentive and deny hard working Australians access to a tax system that provides reward for effort.
It also appears that the States have not given a thought about the fairness of this plan. Low and middle income earners would be harder hit by bracket creep than high income earners, but are likely to receive less benefit from lower stamp duties.
Every time a Federal Government might want to cut personal tax rates, you would now have State Governments out there arguing against it.
Labor has delivered $47 billion of income tax cuts since we came to Office. We have tripled the tax-free threshold, reformed rates and increased thresholds so that working Australians keep more of the income they earn.
As a result, a person on $50,000 per annum now pays over $2,000 less tax every year.
No one that is genuinely committed to tax reform would want to prevent tax cuts like these by locking in rates and thresholds for all time.
So do any of us really want to give State Treasurers a fiscal incentive to be out there campaigning against personal income tax cuts?
The second proposal is to quarantine for the States any corporate tax paid by former State Owned Enterprises once they have been privatised. This is equally as difficult to sustain.
Apart from adding additional complexity to the tax system, it is unclear why the States, who realise the capital proceeds of their asset when they privatise it, should have any expectation of continuing to receive an income stream once the asset is sold.
This seems to be a case of the States wanting to have their cake and eat it as well.
Whilst we support tax reform designed to eliminate inefficient and productivity sapping taxes like stamp duty, we cannot support proposals that fund such reform by introducing changes that are equally as inefficient and productivity sapping.
Conclusion
There is more that I could say on all of these issues, but I will leave it there so that we can have some time for questions and discussion.