Henry Review release date announced!

After almost two years in the making, the Henry tax review will finally be released to the public next Sunday, 2 May.

Treasurer Wayne Swan made the announcement on Friday, 23 April. The government chose to release the report – and its response to it – on a Sunday, so as not to impact the financial markets with any potentially sensitive information.

I will be in Canberra to analyse the review papers and the government’s response to it in a stakeholder ‘lock-up,’ much the same as I do for the Federal Budget. Following the report’s release at 2.30pm, I will be working hard with my team to get as much information to our members and the public as quickly as possible.

While a lot of people think this is the end of the long debate on tax reform, the reality is that this is just the beginning. The government is expected to map out its plan for the country’s tax reform priorities over the next 10-20 years, and there is much work to be done before ideas can be turned into reality.

So what are we likely to see?

Big picture, I’ll be watching for measures that move Australia towards a much simpler, more equitable and broader based tax system. Some of the issues on my ‘To Watch For’ list include equalising the tax treatment for all categories of investment across property, shares and savings, which will help to provide an incentive for people to save for the future.

I’m also looking for the introduction of optional tax returns as a means to make our tax system simpler. I understand there is concern among some tax agents about this, but I’m also encouraged by the majority of Chartered Accountants who tell me that filing simple tax returns is not very profitable and instead they could use that time to work with other clients who need their professional advice.

Other hot issues we’ll see next week include decisions on changing the corporate tax rate, whether the government imposes a resource rent tax for the mining companies, consideration of the ‘adequacy’ of the nine per cent superannuation guarantee, and whether Australia’s ageing population requires a type of insurance designed to encourage people to make their super last longer.

While Dr Ken Henry’s report is expected to make these kinds of recommendations and more, I would still like to caution readers that the government might choose not to adopt them all straight away.

As I mentioned in my last post, Finance Minister Lindsay Tanner last week hinted that the government may choose to implement different initiatives that address underlying issues identified by the review.

If you look back on the life of the Henry Review, you’ll see the goal posts shifted mid-way through, when the financial downturn hit. The challenge for the government is to demonstrate it is serious about tax reform as it considers the impact of major changes that might jeopardise revenue collections aimed at funding the deficit for the next five years.

The danger is that uncertainty about the future can stifle business and investment decision-making at a time when the Australian economy needs it most.

One thing is for certain: all eyes will be on Canberra next Sunday, 2 May.

If you would like to follow the Institute’s response to the release of the Henry tax review, follow us on Twitter and be the first to read our press release. Comprehensive commentary and analysis will then be posted on the Henry Review page of the Chartered Accountants website.

I look forward to sharing information with you, and to engaging in discussion around Australia’s Future Tax System.