Wayne’s Words of Wisdom for the week…
To state the obvious…..our tax system is horribly out of date. Our current Tax Act was initially written in 1936. It was updated/tweaked in 1997….. and is trying to deal with a world that is operating in the new millennium. Think about how much has changed since 1936…. the internet for example. Even the changes since 1997 – Iphones didn’t exist and the world is more mobile now…. people and business operate across country borders like never before.
There is no doubt our tax system needs to be drastically updated and there is lots of talk right now about how best to do that. We are not the only country tackling this difficult issue. A few lessons history has taught us in relation to tax “improvements”:
– Politics always gets in the way of good tax policy.
– “Simplification” always ends up being more complicated. Particularly as they build in lots of “ifs” and “buts” to accommodate all the various lobby groups.
– Governments try to over use the tax system as a “motivator” of desired outcomes. There are other ways that should be explored such as the welfare system, but that probably won’t stop them this time.
– Unintended motivations and unforeseen consequences will follow.
So are we doomed from the start? I’m not sure, but I remain optimistic.
What I do know, is despite this, we must try to improve the tax landscape to encourage in particular small to medium business, innovators and those prepared to have a go. The current system is so broken, we must at least try. A change is as good as a holiday as they say.