26/09/22

AUSTRALIA: Multinational tax top priority for reform.

As published on newcastleherald.com.au, Monday 26 September, 2022.

The government has not ruled out wide-ranging tax reform to improve the sustainability of the budget, but says making multinational corporations pay a fairer share of tax is the top priority.

The treasurer has flagged his interest in changing how the government manages money to ensure it can pay for the ballooning cost of services.

During parliament, the opposition voiced concerns that the government would make changes to franking credits, negative gearing and the stage three tax cuts to repair the budget.

Treasurer Jim Chalmers did not directly rule out broader tax reform but said multinational tax reform, an election commitment, was top of the list.

"What we have said is our priority when it comes to tax reform is multinational taxes," Dr Chalmers said in parliament.

Ahead of the election, Labor backed the OECD's plan to install a 15 per cent minimum tax on multinationals and a handful of other measures to tackle multinational tax avoidance.

The measures are expected to raise $1.89 billion over the next four years.

However, the government has outlined several growth areas that will require extra funding, including defence, health, aged care and the NDIS, as well as the growing burden of servicing government debt.

Dr Chalmers said the initial expected annual cost of servicing debt would be $26 billion at the end of 2025/26 but that was now tipped to be $33 billion.

"Interest rates are rising, it costs more and more to service that debt ... billions of dollars more that we have to find in the budget to service that debt," he said.

"That means, more than ever, that we need to make sure that the investment that we make in the budget delivers genuine bang for buck."

Finance Minister Katy Gallagher said the budget was under pressure from commitments made by the previous government that were not budgeted for.

"Whether it's COVID support, delayed infrastructure projects, support for flood victims, in there, there is at least $6 billion that those opposite promised to spend in the last financial year, but didn't - and we will now have to pay for these, as they flow over through the October budget," she said.

Nationals leader David Littleproud said the government needed to find ways to keep costs down for regional households in the budget.

He said Labor's commitment to boost childcare subsidies would "only go to the top end of town" and failed to address availability concerns.

"It's not just about a price, it's also about availability and accessibility to child care, and it's more acute in regional Australia where families aren't able to send the breadwinners back to the workforce because there is no child care at all," Mr Littleproud said.

The reinstated fuel excise tax is expected to hurt households and lift petrol prices by at least 22 cents a litre from Thursday.

Ahead of the restored fuel tax, retail petrol prices lifted 10.4 cents a litre last week to $1.75 a litre, according to the Australian Institute of Petroleum.

This was the biggest jump in 18 weeks.