NO.069

The first package of legislation implementing the landmark reform of Australia’s

business tax system was introduced into Parliament today. The Bills cover:

• the reduction in the company tax rate from 36 per cent to an internationally competitive

  30 per cent in 2001-02;

• fundamental reform to the depreciation system, including replacing accelerated

  depreciation with effective life depreciation, which will partly fund the lowering of the

  company tax rate;

•  
• the introduction of an internationally competitive capital gains tax regime where the

  highest rate for individuals will effectively be 24.25 per cent; and

•  
• a number of integrity measures which will reduce tax avoidance opportunities.

Many of the capital gains tax measures operate from the date of announcement of the New

Business Tax System on 21 September 1999, while the integrity measures take effect

from 22 February 1999. It is essential that the legislation be passed as quickly as

possible. Individuals need to be certain that they will get the cut in capital gains tax

so that they can take decisions accordingly. Companies and investors need to be certain

that the company tax rate will be reduced so that they can make their plans.

Whilst the Senate has agreed to an inquiry into the Government’s business tax

reform proposals, which is to report by 22 November, the inquiry should not delay the

passage of the Government’s legislation. The Ralph Committee has already completed

the most exhaustive and most consultative inquiry on business tax ever.

The Government’s response to the Ralph Committee’s Report is in two stages.

On 21 September I announced a range of measures with phased implementation. The first

package of legislation was introduced today and further legislation will be introduced

later this year and early next year.

The Government is consulting on the remaining Ralph recommendations and will announce

its response next month.

On 21 September I released an outline of the fiscal impact of both the announced

measures as well as the recommendations that are still being considered.

Attached is a breakdown of the fiscal impact of the measures introduced into Parliament

today, the fiscal impact of the remaining measures that have been announced and are to be

introduced later this year and early next year, and the impact of the measures under

further consultation. These revenue estimates outline the impact of the measures against

the forward estimates presented in the 1999-2000 Budget, which incorporate the policy

measures announced in A New Tax System. The estimates are prepared on the same

basis as those provided on 21 September in the Government’s first stage response to

the Ralph Report.

As I indicated when announcing the first stage of the Government’s response to the

Ralph Report, the Government’s consideration of the remainder of the Report’s

recommendations will be guided by the objective of achieving a broadly revenue neutral

outcome. As evident in the attached tables, the overall fiscal impact of the measures

already announced and those being considered by the Government is revenue neutral.

The differences between the attached revenue estimates and those contained in the Ralph

Report primarily stem from different dates when measures commence or where a Ralph

recommendation has been rejected. In addition, the attached tables include revenue

estimates on some integrity measures which were not costed in the Ralph Report.  

Download Excel Attachment

CANBERRA

21 October 1999