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dc.contributor.authorPope, Jeffrey
dc.date.accessioned2017-01-30T11:56:51Z
dc.date.available2017-01-30T11:56:51Z
dc.date.created2010-05-18T20:03:03Z
dc.date.issued2005
dc.identifier.citationPope, Jeff. 2005. Reform of the personal income tax system in Australia. Economic Papers. 24 (4): pp. 316-331.
dc.identifier.urihttp://hdl.handle.net/20.500.11937/16636
dc.identifier.doi10.2537/0812-0439.24.4.2721
dc.description.abstract

This paper examines the case for reform of Australia's Personal Income Tax (PIT), argues that it is outdated, and demonstrates a growing consensus for reform. The importance of tax avoidance, particularly the use of trusts, in the Australian PIT system, and arguably its abrogation of modern-day criteria of what constitutes a 'good tax', is emphasised. Three possible 'reform' options are identified: the 'tinkering and tokenism' approach of current Government policy; moderate reform and a proposed 'significant reform option' costing around $22 billion. Essentially this comprises company and top PIT rate equalisation and a doubling of the tax-free threshold. But funding this is problematical. Two key arguments of the paper are that: (real) simplification i.e. lower compliance costs, is an important yet usually down-played objective in reform proposals; savings from reform denying PIT deductions such as work expenses are insufficient to achieve significant PIT reform. An increase in the rate of the Goods and Services Tax (GST) from 10% to 15% (with a compensation package) is therefore advocated in a revenue-neutral analysis ignoring current Government budget surpluses. The overall outcome would be a simplified, more equitable and incentive-driven PIT system that would move Australia closer to the PIT and GST policies of other OECD countries. But the political difficulties of reform mean that the Government's 'tinkering' approach is likely to continue.

dc.publisherEconomic Society of Australia
dc.titleReform of the personal income tax system in Australia
dc.typeJournal Article
dcterms.source.volume24
dcterms.source.number4
dcterms.source.startPage316
dcterms.source.endPage331
dcterms.source.issn08120439
dcterms.source.titleEconomic Papers
curtin.note

This article is reproduced here with the permission of the Economic Society of Australia. For further information about submitting articles to our journals and membership, please visit our website www.ecosoc.org.au.

curtin.accessStatusOpen access
curtin.facultyCurtin Business School
curtin.facultySchool of Economics and Finance


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