PwC calls for bipartisan approach to tax reform
PwC Australia head Luke Sayers said Australia needed to develop a bipartisan tax reform agenda - one that could survive the political cycle if it wanted to confront serious budgetary problems.
And both sides of politics needed to stop ruling things out - such as the GST - when considering tax reforms.
"Without spending constraint, and tax reform, we can abandon the hope of seeing another federal surplus for at least a generation," Mr Sayers said. "A dialogue that begins with people ruling things out of scope is a dialogue doomed to failure, and we've seen it quite simply too many times before."
Part of the reason the Henry tax review did not succeed was that the GST was excluded.
Mr Sayers suggested two changes could be made to the tax system immediately that would put Australia in a stronger position.
"[We] should rely more heavily on consumption and land taxes, and less on corporate and personal taxes, stamp duty, taxation of insurance, and payroll taxes in their current form," Mr Sayers said.
"[And] taxes need to be more uniformly applied with fewer exemptions and concessions. These two changes alone would help address some of the major economic and fiscal challenges facing us today."
Former Treasury deputy secretary Mike Callaghan said politicians and some sections of the media needed to stop talking about taxation in negative terms.
"As we've seen, an extremely effective way to attack a policy proposal is not to debate it on its merits but just say 'it's nothing more than a big new tax'," he said.
"An extremely effective way to attack any suggestion of a tax review is just to say it's nothing but a hidden agenda to lift taxes."
He said a critical precondition for a proper debate about tax was public "trust" in a government's ability to make spending decisions.
Frequently Asked Questions about this Article…
Luke Sayers of PwC Australia urged the major political parties to strike a bipartisan 'grand bargain' on national tax reform — a package that could survive the political cycle — arguing it’s necessary to confront serious budgetary problems and help Australia return to a federal surplus.
According to Mr Sayers, without spending restraint and meaningful tax reform Australia risks not recording another federal surplus for at least a generation. He says reform is essential to address long‑term economic and fiscal challenges.
The article reports Mr Sayers suggested relying more on consumption and land taxes and less on corporate and personal taxes, stamp duty, taxation of insurance and payroll taxes in their current form. He also called for taxes to be more uniformly applied with fewer exemptions and concessions.
The article notes that part of the reason the Henry tax review did not succeed was that the GST was excluded. Mr Sayers warned politicians should stop ruling options like the GST out of scope when considering tax reform.
Mike Callaghan warned that politicians and some media often frame tax proposals negatively — labelling them as a 'big new tax' or a 'hidden agenda' — which undermines constructive debate. He said building public trust in government spending decisions is a critical precondition for a proper tax debate.
In plain terms, Mr Sayers proposed reducing special exemptions and concessions so tax rules are simpler and more consistent across different groups. While the article doesn’t list investor impacts, uniform rules can make tax outcomes more predictable — something everyday investors often watch closely when assessing policy risk.
Mr Sayers argues tax reform must survive election cycles to be effective. A bipartisan approach — a 'grand bargain' between major parties — would help reforms stick, whereas a debate that starts by ruling options out is likely doomed to fail.
Based on the article, watch for signals that politicians are willing to discuss a wide range of options (including GST and shifts toward consumption or land taxes), any moves to reduce exemptions, and efforts to build public trust in spending decisions. Those themes indicate whether reforms might be durable and how the tax mix could change over time.
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