Username:
Password:
Forgot Password?

Australia's future tax system (Cont)
Print this Article Print this Article
Email this Article

Background 
 
The first report relating to the review of Australia’s future tax system (AFTS), entitled ‘Architecture of Australia’s tax and transfer system’ was released by the Treasury at a joint press conference held by the Treasurer, the Hon Wayne Swan MP and the Treasury Secretary and Chair of the review panel, Dr Ken Henry on 6 August.  
 
Then, on 19 August, the review panel invited submissions on this first report, which are due by 17 October 2008.  
 
To assist in preparation of submissions, the Panel has suggested that the review’s terms of reference be taken into account and the following questions used as a guide.

  • What major challenges facing Australia need to be addressed through the tax-transfer system?
    •  
  • What features should the system have in order to respond to these challenges?
    •  
  • What are the problems with the current system?
    •  
  • What reforms do we need to address these problems?
Submissions and any initial discussions with interested parties will be used in developing a consultation paper that will be released before the end of 2008. This will provide a basis for further review processes during 2009, including further opportunity for submissions, public meetings and direct consultations on issues and options. The review panel will also consider commissioning other papers or studies during 2009. The final review report will be delivered to the Treasurer at the end of 2009.  
 
First report - 'Architecture of Australia's Tax and Transfer System' 
 
The first report entitled 'Architecture of Australia's Tax and Transfer System' sets out the architecture of the present tax-transfer system and provides some international comparisons along with some interesting findings from studies of organisations such as the OECD. It makes no recommendations about the future direction of the tax-transfer system in Australia and presupposes no particular reform agenda. However, the information provided does throw light on some areas that are ripe for reform.  
 
Some key details in the report include:
  • Australian governments levy at least 125 different types of taxes, with 90 per cent of the total tax revenue raised from just 10 taxes
    •  
  • While a certain degree of complexity is inevitable, the complexity of the tax-transfer system is above the optimal level because of incremental policy development and income maximising behaviour of taxpayers and transfer recipients
    •  
  • Compared with other OECD countries, Australia has the highest share of tax revenue from capital income but an OECD report has found that taxes on capital income have one of the most detrimental impacts on economic growth
    •  
  • Other comparisons with OECD countries show that:
    • Australia’s company tax rate is now above the average
      •  
    • Reliance on consumption taxes is lower than average whilst reliance on revenue from taxes on property is greater
      •  
    • Australia's tax-transfer system is highly redistributive
      •  
    • Australia and New Zealand are the only OECD countries with a dividend imputation system.
Further detail, including the terms of reference of the review, is available on the AFTS website. For further information on the Pension Review, including a copy of the Pension Review background paper, go here.  
 
The Treasurer's press release of 13 May 2008 announcing the review of Australia's tax system is here.