Tax experts believe Labor's plan to reduce GST paperwork for small and medium businesses is a win for commonsense, but say there's still plenty of red tape to cut.
Under the plan, from July 2014 businesses with a GST turnover of under $20 million a year will be allowed to lodge business activity statements (BAS) just once a year, rather than four times.
"That reduces enormously the overall burden of business compliance," Prime Minister Kevin Rudd told reporters in Sydney.
"We are in the business of making it easier for small business to get out there and prosper."
Around 1.35 million businesses would benefit from the move. Now only businesses with a $2 billion threshold can make an annual lodgement.
Research suggests that small and medium enterprises spend almost 500 hours a year meeting their tax obligations, of which nearly half is GST compliance.
Assistant Treasurer David Bradbury said never before were businesses strangled with red tape quite like they were when the Liberal government introduced the GST in 2000.
"Today we are taking out the scissors," he said.
Institute of Chartered Accountants Australia general manager Yasser El-Ansary thought the decision was "good policy and a win for commonsense".
"But there is plenty more red tape to be cut and it cannot be done on an ad hoc basis," Mr El-Ansary said.
"The next federal government needs to deliver real reform of Australia's tax system, instead of cherry-picking on an ad hoc basis."
He said there is a need to take another look at the Henry tax review, and implement meaningful reforms that simplify our tax system.
He also said an increase to the 10 per cent GST must be part of this strategy in order to step away from the reliance on direct taxes.
Opposition small business spokesman Bruce Billson says Mr Rudd has made promises before to make BAS easier for business, only to later dump the plan.
"It's like groundhog day," he said in a statement.
"Kevin Rudd promises small business the world, but sadly it's all talk and no action."
The coalition has promised in government to cut red and green tape by $1 billion per year.
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