22 December 1998
Review of Business Taxation
Department of the Treasury
CANBERRA ACT 2600
Enclosed are the comments of the Victorian Automobile Chamber of Commerce (VACC) concerning the RBTís first discussion paper, A Strong Foundation.
Before providing the VACCís direct comments to the issues raised by the discussion paper, it is important to identify the small business constituency represented by the VACC.
The VACC is the peak employer body in the Victorian retail automotive industry. It represents over 4000 businesses (new car dealers, body repairers, engine reconditioners, and service station dealers are some of the industry segments VACC represents). According to the most recent ABS data, the industry employs 49,519 people. The industry has an annual turnover of $9.7 billion in 1997, contributes 30% of all Victorian retail turnover, the industry represents 25% of all Victorian Retail establishments, and represents 19% of employment in the retail sector. The industry directly and indirectly services 2.8 million cars on Victorian roads.
The VACC noted the issues contained in A Strong Foundation, and in principle agrees with the majority of issues and concerns raised in the discussion paper. There were many important points raised concerning the conceptual framework of Australiaís taxation system that the VACC supports should be considered and debated publicly.
There are a number of points that the VACC considers needs be understood, and considered in the overall debate about reforming Australian tax system.
- There has been considerable identification and discussion of the "cultural" and psychological gulf that has developed over time between taxpayers and tax regulators. This is a very important issue, not just in terms of the relationship of legal obligations, but also in the psychology of the relationship, which on anecdotal evidence is severely affecting the level of trust between the two parties.
- An important topic of discussion in the whole tax reform debate has been the issue of simplicity. That is a concept that small businesses particularly are especially concerned, as it regards reducing the financial, resource and time burden of tax compliance. However, it must also be asserted that the business community needs not only tax simplicity in compliance matters, but also importantly needs tax framework, system, and legislative certainty. The VACC believes this to be self evident, but must be firmly advocated to the review processes.
- Embedded into the tax system should be a Ďuser based designí feature - so that the system, and particularly the compliance and administrative tasks are clearly and readily understandable, complexity is reduced, do not take excessive time to undertake, and in general are designed from the perspective of those who must comply with it.
- The VACC strongly supports the proposal of establishing teams to review business taxation laws, with more involvement from external advisers and more consultation with business. It is important, that small business is adequately represented in such a process.
- The VACC agrees with the concept of establishing an independent Board to overview the operations of the ATO. The VACC agrees with the concept of the proposed governance structure of the ATO including a Board represented by both public and private stakeholders. It is important that any representation on the Board also includes small business.
- The VACC agrees with the national objectives as set out by the RBT- optimising economic growth, ensuring equity and facilitating simplification. These objectives should be clearly articulated and readily evident in the lay persons reading and understanding of tax compliance.
- Transitional equity is an important issue for all businesses, but particularly for small business and businesses involved in the retail automotive industry. The transition from the current WST to the GST system, with its associated business and general tax reforms, need to be seriously understood and considered by government, in planning for the transitional period. Issues include transitional arrangements for new cars, and the WST paid stock on hand issues.
Thank you for the opportunity to comment on the RBTís A Strong Foundation discussion paper.
Should you require any further information on this submission, or on the specific tax concerns of the VACC and the retail automotive industry, please contact Roberto Colanzi, Senior Research Officer, 03 9829 1206, or email email@example.com