Australia's Future Tax System

Consultation Paper

Appendix D: Research commissioned by the Review Panel

As noted earlier, the terms of reference for the review into Australia's future tax system are extremely broad. To help inform the Review Panel's deliberations, a wide range of opinions and expertise needs to be considered. The consultation process will help elicit some of this information. However, the Review Panel is conscious of the need to engage technical and academic expertise where required. As such the Review Panel has decided to commission research in a number of areas, some of which may be published by the review and/or presented to the tax conference planned for 2009.

The following outlines those research areas the Review Panel is considering or has requested at this point in time.

Roads and transport

This research aims to develop a conceptual framework for efficiently allocating private and social transport costs between users and service providers; consider the existing system of transport-related taxes and charges and its efficiency costs; if there are taxes and charges that more directly target the marginal private and social costs of transport; and consider current technological constraints to applying such charges, while taking into account new technology and international practice.

Tax and transfer compliance costs

This research aims to draw together and build on results from existing research in this area and attempt to identify a framework for calculating robust estimates of compliance costs in the future.

Housing

This research aims to estimate the net tax-transfer subsidy accruing to owners, investors and renters from the treatment of housing by the tax-transfer system (under different tax benchmarks); the economic incidence of the taxes or subsidies, their distribution by income and age and their effect on housing prices; the efficiency, equity and simplicity of specific taxes and transfers; potential reform options; and the impact of tax and transfer settings on housing affordability.

Natural resources

This research aims to develop an economic framework for the taxation of natural resources; current tax and royalty settings; alternative approaches proposed in the literature or used overseas; implications for federal fiscal relations; and the role of taxation as a mechanism to ensure optimal use of the resources.

Environmental taxation

This research aims to outline a framework for using tax-transfer measures to address environmental market failures, particularly in the context of other mechanisms available to deliver environmental outcomes (for example, regulation); outline inefficient elements of the existing tax-transfer system; and highlight the major environmental issues facing Australia and consider possible tax-transfer system policy responses.

Capital income and business taxation

This research aims to describe how Australia's tax-transfer systems tax capital income, both at the business and investment level (for both residents and non-residents); discuss the implications of those arrangements for the growth prospects and dynamism of the economy; consider distributional impacts; and outline broad reform choices and options.

A client-centred tax-transfer system

This research aims to consider system complexity from the perspective of the citizen; present a set of principles for testing alternative approaches; examine opportunities for improvement afforded by new technologies; explore developments in other countries and the private sector; describe linkages between administrative reforms and policy design.

Education and skills

This research aims to explore the incentives and disincentives for skills acquisition created by the tax-transfer system; examine the treatment of investment in human capital relative to other forms of capital; consider whether there are other, public, benefits to high levels of education; and review existing literature on the impact of tax-transfer incentives and assess the possible impact of demographic and structural change on incentives.

Lifecycle and the tax-transfer interface

This research aims to review the lifetime redistributive impact of the tax-transfer system, examining both interpersonal and intrapersonal distribution; and to consider the amount of redistribution to different cohorts under a range of different policy settings.

Efficiency of taxes

This research aims to assess the efficiency costs of the major taxes currently being levied in Australia (at the Australian, state and local government levels). The research will attempt to estimate the efficiency costs of the taxes now levied and any proposed changes.

Australian-state government taxation

This research aims to set out a framework for Australian-state government division of taxing responsibilities; consider the role and implications of vertical imbalance; undertake comparative analysis with other federations; and draw out some lessons and possible policy alternatives for Australia.

Consumption (including alcohol and tobacco)

This research aims to present a theoretical framework for excise in a modern tax system, looking particularly at the case of alcohol and tobacco, as well as luxury taxes and fuel taxes; and consider specific reform opportunities for taxes on specific goods and services taxes in Australia.

Development of tax-transfer theory

This research aims to provide a brief history of how tax and transfer theory has evolved over time, together with some insights on future directions and how this can be applied in a policy context. This will include some analysis on the impact that population ageing may have on tax policy design in the future.

Impact of the tax-transfer system on labour supply

This research aims to undertake modelling of the impacts of various, hypothetical, policy approaches (consisting of both tax and transfer changes) on labour supply decisions.