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Time to dust off tax reform process again

AAP logoAAP 14/12/2016 Colin Brinsden, AAP Economics Correspondent

For all the fanfare when former treasurer Joe Hockey launched his tax white paper back in March last year, the tax system is still not fit for purpose in the 21st century.

That's the view of business consultants at BDO, who believe special interest groups have had too much influence and too frequently limit reform to just "tinkering around the edges".

Ahead of Monday's mid-year budget review, BDO tax partner Mark Molesworth calls for an independent body backed by all parties to drive proper tax reform.

He says the government has struggled to mange even simple things, like the backpackers' tax.

"There is no point in fiddling with tax cuts while Rome burns," Mr Molesworth told AAP on Wednesday.

The government must tackle structural issues in the tax system.

His colleague, Lance Cunningham, BDO's director of national tax, says the government is relying on a company tax cut to 25 per cent from 30 per cent over the next 10 years to do most of the heavy lifting in its fight to prop up a lagging Australian economy.

But he said the corporate tax rate was only one of many tax levers the government could be pulling to restore economic growth.

"We suggest the federal government should be reinstating a holistic tax reform process to identify the many other inefficient and ineffective tax measures that are holding back the Australian economy," he said.

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