Re:think – Better Tax System, Better Australia: Response to the Discussion Paper

This submission responds to the Australian Government’s 2015 tax discussion paper, Re:think, for the review of the tax system. Research Australia accepts the paper’s principles of equity, efficiency and simplicity but maintains that tax should also be used to encourage innovation and productive investment and to reduce harm from legal but undesirable activities. Citing Financial System Inquiry findings that new ventures struggle to obtain debt and equity finance, it recommends tax incentives, modelled on the United Kingdom’s Enterprise Investment Scheme, for individuals and superannuation funds investing in small, innovative, research-intensive companies, and a tax bias in favour of savings used for productive investment. It recommends retention of the R&D Tax Incentive and self-education deductions, opposes the proposed 1.5% cut to R&D Tax Incentive rates, and seeks reinstated quarterly payments, adoption of the Australian Innovation and Manufacturing Incentive, and extension of Employee Share Scheme concessions to listed companies eligible for the refundable R&D Tax Incentive. For the not-for-profit sector it asks that deductible gift recipient status, the income tax exemption for research organisations and overseas spending of research donations be protected, and that fringe benefits tax changes consider wage impacts. Noting that daily smoking fell from 24.3% to 12.8% between 1991 and 2013, it supports tobacco and alcohol excise, endorses Foundation for Alcohol Research and Education proposals to replace the Wine Equalisation Tax with a volumetric tax and abolish its rebate (projected savings of $4.52 billion over four years), and keeps open future taxes on foods high in fat and sugar.