Australia's Future Tax System

Consultation Paper Summary

From the Review Panel

The tax-transfer system is a fundamental part of Australia's social and economic infrastructure. It has been, and will continue to be, shaped by the choices that Australians make about the type of society in which they choose to live. It can have a profound influence on the opportunities available to every Australian.

In August, we invited submissions to the review, guided by four broad consultation questions.

Q1. What major challenges facing Australia need to be addressed through the tax-transfer system?

Q2. What features should the system have in order to respond to these challenges?

Q3. What are the problems with the current system?

Q4. What reforms do we need to address these problems?

In response we received around 500 formal submissions and a further 260 pieces of correspondence from people and organisations across the entire community. These covered a wide range of ideas, views and issues — an extremely rich source of information that we will draw on over the course of the review. We wish to thank everyone who participated in this stage of the consultation process. A list of the formal submissions, and an analysis of them, is at Appendix B and C respectively. All formal submissions are available on our website at www.taxreview.treasury.gov.au

This paper is a summary of the longer Australia's future tax system: Consultation paper. As such, it confirms the approach we are taking to the review, outlines what we have heard through public submissions and highlights the major issues we believe we need to consider. We have also detailed the questions we think we need to answer in shaping our recommendations. Of course, more detail on each of these elements is contained in the longer paper.

Our approach to the review

Our terms of reference are very broad. We have been asked to undertake a 'root and branch' review. Accordingly, our recommendations will encompass the policy framework, the administrative structure and the policy and administrative processes that determine the structure and performance of the tax-transfer system.

As stated in our terms of reference, we will observe the Australian Government's policy not to increase the rate or broaden the base of the GST and to preserve the tax-free status of superannuation payments for people over 60.

We also note the announcement in the 2008-09 Mid-Year Economic and Fiscal Outlook that Australian Government consideration of the previously announced aspirational personal income tax goals has been deferred until there is an improvement in overall economic conditions.

The structure of our Consultation paper (and this summary) reflects the approach we are taking to the review. We start with the challenges, opportunities and other 'drivers' expected to impact on Australian society in the 21st century, and the design principles against which the current system and potential alternatives will be tested. These are discussed in Sections 1 and 2.

Against this background, we propose to examine the various elements of the system as well as themes which cut across the structural elements. Our initial examination of these elements and themes is outlined in Sections 3 to 14.

We intend our considerations to be informed by the best available evidence from Australia and overseas. To ensure we are well informed and to support public discussion and debate, we have decided to commission a series of analytical papers to explore significant tax policy issues relating to the work of the review. A number of external consultants will be engaged to prepare papers and present them to us between March and June 2009. Some of the papers may be presented at our tax policy conference scheduled for June 2009.

Further opportunities to participate

Community participation is vital to the success of the review. We will continue to draw on the submissions we have already received and welcome further public submissions in response to our Consultation paper at any time up to 1 May 2009. We may also release more targeted discussion papers and call for submissions on specific issues during the remainder of the review period.

We will host a series of public meetings in all capital cities and several major regional centres in March 2009. We will also conduct bi-lateral and roundtable discussions with key industry and community groups between January and June 2009. In June 2009, we will host a two-day tax policy conference. This will provide an opportunity for stakeholders to share commissioned research and enter into detailed discussion of options for Australia's tax-transfer system.

More information on participating in the review may be found under 'How to participate'. More information on the review is available at www.taxreview.treasury.gov.au

We look forward to engaging with you as the review progresses.

Australia's Future Tax System Review Panel

The members of the Review Panel are:

  • Dr Ken Henry (Chair), Secretary to the Treasury;
  • Dr Jeff Harmer, Secretary, Department of Families, Housing, Community Services and Indigenous Affairs;
  • Professor John Piggott, Professor of Economics/Associate Dean, Research, Australian School of Business, University of New South Wales;
  • Ms Heather Ridout, Chief Executive, Australian Industry Group; and
  • Mr Greg Smith, Adjunct Professor, Economic and Social Policy, Australian Catholic University.