An independent upper house member believes now is the time to genuinely consider tax reform and design changes to the state's tax system.

Responding to Treasury's May budget update on Friday, Murchison independent MLC Ruth Forrest said tax revenue would drop 25 per cent next year as a result of the economic downturn and tax relief measures associated with the coronavirus pandemic.

"Under our current tax system, there is no link between growing the economy and the state reaping the benefits," Ms Forrest said.

In cash terms in next year's budget, we will spend $1.7 billion more than we will receive," she said.

"That's just for one year. We will spend 30 per cent more than we will receive.

"It's going to take a long time to close that gap."

Labor finance spokesman David O'Byrne said the government needed to rule out public sector job cuts and austerity measures to assist its budget position.

"And he needs to be clear if he has plans for privatisation (of public assets) and new taxes for the state," he said.

Greens leader Cassy O'Connor said the supply of social and affordable housing should be prioritised in the government's pledge of an aggressive infrastructure spend.

"The experience of the 2008 global financial crisis tells us the best 'bang for buck' stimulus spend is on housing," she said.
Tasmanian Chamber of Commerce and Industry chief executive Michael Bailey said the May budget update showed there was a long road ahead to get the state's economy back on track.

Its important that during the recovery the government looks to reduce red tape and taxation to help businesses re-establish themselves," he said.

The Advocate 15 May, 2020