While health workers are undeniably on the front lines of the fight against the COVID-19 pandemic, there is another cohort of silent heroes – accountants and tax officers, writes Wayne Debernardi, CEO of the Institute of Accountants. public.
The Institute of Public Accountants (IPA) has a large contingent of firm members, primarily small accounting firms serving individual and small business tax clients. Many of them have been instrumental in helping these taxpayers access the many benefits of the government’s three stimulus packages and various other measures.
This created an overwhelming workload for accountants and tax officers, who had to bear a tremendous burden trying to help clients navigate and access stimulus. As the government, the Treasury, the ATO and various other government agencies quickly draft and amend laws, regulations and guidelines, we find that accountants and those who represent them have come to an agreement to ensure that stimulus measures make sense and can be implemented effectively. JobKeeper on its own has a lot to answer for, as we continue to navigate its complexities. And of course, it’s not over yet as we know a review is likely ahead of the currently scheduled September end date.
In the video below: Call to extend JobKeeper
It is also important to draw attention to the enormous pressure that accountants and tax officers are under to discount or write off fees due to financial difficulties faced by clients. The mental and physical stress caused to many small entrepreneurs and their advisers is immeasurable.
This is another silent aspect of this pandemic – we know the statistics on the number of people who have lost their lives, or been infected or have recovered – but we don’t know the silent and invisible impact on mental health. , livelihoods and well-being.
What other issues and concerns are accountants and tax officers concerned about? Falling behind financially and perhaps for some below the poverty line is one of the main problems we face. That is why measures such as JobKeeper do not only concern the economy, but also social and health aspects. We know that government and business need to get it right when it comes to economic stimulus measures and that large-scale, integrated measures across all policy areas are needed for lasting impact. Without appropriate policy measures, there is a risk that employees and workers will fall behind financially and even fall into poverty, making it more difficult to recover livelihoods during the recovery.
The International Labor Organization (ILO) says 2.7 billion workers (81 percent) globally have been affected by COVID-19, with 1.25 billion workers (38 percent) globally facing severe impact or displacement (unemployment). We ask how the world will react to millions of people potentially dragged into poverty, back into poverty or even further into poverty? Will existing social safety nets be able to cope? What will Australia’s response be and how will this shape our foreign policy in the decades to come? So many questions that will have to be answered. Even though Australia is classified as a “rich country”, it is still essential to define the policies well, both during and after the pandemic. The social and economic impact of more Australians falling below the poverty line would be catastrophic on several levels.
Accountants and tax officials know better than many that while we were in a relatively good fiscal position compared to many OECD countries, with relatively low public debt and a near-surplus Commonwealth budget, we have a tax system. ill-equipped to handle a downturn given over-reliance on Commonwealth-level personal and corporate income tax and state real estate transactions. About 60 percent of Commonwealth tax revenue comes from personal and corporate income taxes, almost double the OECD average.
Australia’s experience of the global financial crisis suggests that it will take a long time for corporate taxes to recover from the COVID-19 crisis, as business losses are carried over. This puts additional pressure on personal income taxes to bear the burden.
Rising unemployment (even with JobKeeper subsidizing wages), and even more the expected weakness in wage growth, suggests that personal taxes will also not provide a stable or growing base for the Commonwealth for many years to come.
We also cannot rely on the GST, as the percentage of consumption on which the GST is payable is currently around 47% due to exemptions on food, education and health.
The COVID-19 slowdown has undermined the ability of governments to generate revenue given the disruption of business and personal income and the shift in consumption and savings behaviors. The pandemic has now exposed an ill-equipped tax system to support the recovery process. We need to rebuild with effective taxes that support growth. Hard work has already been done with previous reviews such as the Henry Review (The Australian Future Tax System Review). We remain hopeful that the pandemic will demonstrate the urgent need for strong and genuine tax reform, and that the political will will be found to tackle Australia’s precarious income base. So much depends on it.
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