IMF requires tax shakeup as federal price range looms

A worldwide monetary physique has urged the federal authorities to implement tax reform as Australia’s financial system manages a “soft landing”.

In its newest report, the International Monetary Fund (IMF) praised the dealing with of Australia’s financial system throughout troublesome situations as inflation pressures return.

“Executive directors welcomed Australia’s progress toward a soft landing and internal balance,” the report mentioned.

“They commend Australia’s robust institutions, flexible markets, agile policy toolkit and flexible exchange rate, which position the country to manage external risks from trade policy uncertainties and tighter global financial conditions.”

The report got here after an uptick in inflation, which led the Reserve Bank to hike rates of interest.

IMF requires tax adjustments

The IMF urged the federal authorities to seek out different strategies to enhance the fiscal scenario.

“(Directors) encouraged comprehensive tax and expenditure reforms, while protecting and prioritising infrastructure investments to enhance productivity and support growth,” the report mentioned.

“Directors highlighted the need for a holistic strategy to address housing supply constraints, emphasising implementation of supply-boosting measures and tax reforms.”

The fund additionally referred to as for a rise within the 10 per cent fee of GST, reducing the corporate tax fee and rising taxes on sources.

The tax adjustments anticipated within the 2026 federal price range

Treasurer Jim Chalmers is predicted to announce a discount of the 50 per cent concession for capital good points tax within the May federal price range.

However, the treasurer mentioned the federal government had not modified plans on the tax low cost.

“We know there are intergenerational issues in our economy and in our budget. We’re dealing with them in other ways,” he advised ABC radio on Monday.

Dr Chalmers mentioned the fund’s report was a sign the federal price range was on course regardless of international headwinds.

“The IMF’s report shows that our economic agenda with cost-of-living relief, budget repair, and economic reform is the right approach,” he mentioned in a press release.

“The IMF has described the government’s reform agenda as ‘bold’ and recognised our efforts across multiple fronts.”

The report additionally referred to as for higher ties between the federal authorities and states and territories.

“Directors also recommended improved fiscal co-ordination across the federation and regular monitoring of sub-national fiscal positions,” the report mentioned.

Despite the reward within the fund’s report, Dr Chalmers mentioned extra work wanted to be accomplished.

“There are some ideas in these reports that we agree with, some that we don’t, that we won’t be picking up and running with,” Dr Chalmers advised ABC radio.

“But overwhelmingly, this IMF report was a really optimistic report about Australia and concerning the authorities’s financial plan.”