Tax
A “better tax system” is a simpler tax system
By Sylvia Villios, Adelaide Law School
The Commonwealth Government Re:think Tax Discussion Paper (discussion paper) aims to generate consultation within the Australian community as to how Australia can create a better tax system so that as a nation we are equipped to deal with the considerable challenges that lie ahead.(1) The government’s objective is to achieve a better tax system that delivers taxes that are “lower, simpler, fairer”.(2)
The government describes a simpler tax system as one which “enables people and businesses to spend their time earning, producing and innovating, rather than complying with red tape”.(3) Given the complexity that is ingrained in our tax system, it is not surprising that achieving a “simpler” tax system is high up on the government’s agenda. There is compelling evidence that simplifying the system would provide significant benefits to the economy and create greater taxpayer engagement.(4)
There are concerns expressed by stakeholders in relation to the increasing complexity of the Australian tax system and the issues raised in the area of “simplicity and administration”.
Given the systemic complexities of the current system, it is likely that structural reform will be needed if the government is serious about making the tax system simpler. Structural reform involves community consultation and debate and trade-offs being made between the socio-economic principles of efficiency, equity and simplicity.
Simplifying the tax system will have significant benefits to the economy and instil a greater level of confidence in the Australian community and therefore should drive that debate. Ultimately, the balance that is struck will determine whether the tax system is sustainable and is well equipped to meet the demands of the 21st century.
(1) Department of the Treasury (Australia) Re:think Tax Discussion Paper (March 2015); Commonwealth of Australia 2015 Intergenerational Report, Australia in 2055 (March 2015).
(2) Department of the Treasury, above n 1, p 1.
(3) Department of the Treasury (Australia), The Conversation, A Better Tax System, 2015, accessed 2 April 2015.
(4) Department of the Treasury, above n 1, p 168.
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