“The Government is confronted with a…short and long term fiscal problem which isn’t really going to get any better,” he said.
“We do have an expenditure problem and of course the budget is based on I think some reasonably optimistic assumptions.”
Mr Shepherd said we must look at tax reform in the context of the economy and Federation to cut out duplication and give states more responsibility.
“States should be sovereign in their own right and states should have as much independent revenue coming directly to them as possible to let them get on with the job,” he said.
“Increase the (GST) rate, increase the base, give the extra money to the states and reduce the tied grants from the Commonwealth to the states and let the states stand on their own two feet.”
Also speaking on the State of the Nation panel, Queensland University of Technology Professor of Taxation, Professor Kerrie Sadiq said Australia needs to stop putting band aids on the tax system.
“We don’t need to keep putting band aids into the tax system in an attempt to fix it,” she said.
“We need politicians to have the courage to stand up and say we need wholesale reform.” Discussing multinational tax avoidance, Professor Sadiq said unilateral action is unlikely to appease the problem.
“Genuine international engagement and multilateral action is going to be essential in addressing BEPS (base erosion and profit shifting),” she said.
On the topic of the digital economy, Professor Sadiq said “the digital economy is just the economy.”
“I think we need to stop thinking about these industries as being special or different, they are the economy now,” she said.
Deloitte Access Economics Partner, Chris Richardson said tax reform in Australia is more important than ever before.
“Tax reform can be a vital contributor to prosperity, to our living standards,” he said.
On implementing tax reform, Mr Richardson said our politicians are “failing us”.
“It’s really hard with the state of politics at the moment, for politicians on either side to lead, it’s getting increasingly easier to become prime minister and increasingly hard to do something with it,” he said.
“To break those chains, it’s outside of parliament that actually has to create room for the inside of parliament to work.”