The Abbott government has been urged to raise and broaden the Goods and Services Tax (GST) and cut inefficient levies like stamp duty on houses and cars, in a submission to the tax white paper by multinational oil and gas company BP.
The GST has been set at 10 per cent since being introduced in 1999, and BP encouraged the government to consider raising it as high as 15 per cent as part of efforts to shift the burden of taxation away from personal and corporate taxes and towards consumption taxes.
“The real opportunity to address revenue needs of the states and improve the efficiency of the tax system overall is to recognise what many other countries have already done by increasing the rate of GST,” said BP, in a submission endorsed by its Australian chief operating officer Andy Holmes.
“Governments should consider increasing the rate and broadening the GST while still keeping it at a competitive level within OECD nations.
“Even if the rate was increased to 15 per cent it would still be well below the average OECD rate of 18 per cent.”
The comments echo the thoughts of the Property Council, which has called for the abolition of stamp duty and for it to be paid for with an increase in GST.
Rio Tinto shared BP’s sentiments on stamp duty, declaring it to be a barrier to investment.
“At a time when investment should be encouraged to stimulate economic growth, stamp duty operates to distort business decisions and acts as a deterrent to corporate transactions,” said Rio’s managing director for Australia, Phil Edmands.
“Consideration should be given to removing such barriers to investment.”
Multinational resources companies like BP and Rio have in recent years warned of the high cost of doing business in Australia, and BP reiterated that minimum and average wages in Australia were higher than most countries.
BP noted that a more competitive corporate tax environment would “partly offset higher Australian wage costs for investors”.
The company said it was encouraged by the “have a go” sentiment in Treasurer Joe Hockey’s second budget, but did warn that superannuation benefits for baby boomers could be causing generational imbalances in Australian society.
“Despite the relatively favourable and fair system for individuals there are, however, increasing concerns about the fairness of superannuation tax benefits and the relatively higher tax burden the younger generation shoulders compared to the older generation because of super concessions,” BP said.
The oil and gas giant called for the petroleum resource rent tax (PRRT) to be simplified, and for feasibility study costs to be considered tax deductable, even for projects that do not go ahead.
The suggested changes for feasibility studies could have major ramifications for the local LNG sector, where some projects like the Browse gas project are abandoned after years of feasibility studies.
Extracted in full from The Age.