Australia's Future Tax System

No. 2009/01
11 March 2009

A community perspective for the tax review

As the end of 2009 deadline for our report approaches, the Review Panel is working through submissions we’ve received from people and organisations across the community.  We’re trying to look at the tax and transfer system from the perspectives of citizens for whom it has been designed, and what that means for how we shape Australia’s Future Tax System.

The complexity of the system continues to be a major theme behind issues being raised by the community.  You may remember, from my address to the National Press Club last November, how my conversation with a businessman, “Jim”, from Jericho drew my attention to some of the tax and transfer complexities ordinary Australians have to deal with in their everyday lives. 

But dealing with complexity is a complex issue in itself, and the Review Panel is still grappling with how best to address it.

Our current system consists of a large number of taxes and transfers, developed at different times, for different purposes and often in an uncoordinated way.  And we frequently have to ask ourselves should we retain the essential features of the current system, or is a more dramatic overhaul required?

When considering proposals for change, we have to consider the trade-off between the short-term costs of change and the long-term benefits of reform.

Realistically we must accept that a certain level of complexity and operating costs are inevitable in order to ensure the system is fair and efficient.  One question is how the burden of this complexity should be allocated between Government, as tax administration costs ultimately paid for by taxpayers, and business and individuals, as compliance costs.  However, this allocation is not always as straightforward as it may first appear.

Take for example, the cost to business of withholding taxes from salary or wages paid to employees.  Collecting from business rather than employees can save in both tax administration and compliance costs.  Employers are often concerned that they have become unofficial tax collectors because they are simply best positioned to do so at the least cost.  Of course, the actual impact of business bearing this cost may also be felt by employees, through reduced demand by business for workers and lower wages.

For businesses in general our aspiration is for investment decisions and the choice of business structure to be driven by obtaining the best return, and not a tax advantage.  For individuals the tax-transfer system should encourage work, but also support the choices people make in balancing work and family life.  We also need to consider the effect tax policy can have on choices that impact on the environment. 

It is on issues such as these that we are still interested to hear the views of all Australians, which is why we are holding a series of public meetings in all capital cities as well as Wagga Wagga and Geelong from 16 to 26 March.

As I have said before, we want to approach issues from the perspectives of everyday citizens.

Ultimately we want to improve the system for the benefit of the whole community, including future participants, and establish a tax and transfer system that positions Australia to deal with the demographic, social, economic and environmental challenges of the 21st century.  We’d like to encourage you to make sure you take the chance to have your say.

Dr Ken Henry
Treasury Secretary and Chair of the Australia’s Future Tax System Review Panel

Register for a public meeting

Registrations for the meetings are essential. Members of the public can register to attend a public meeting by visiting the Public consultation page on the tax review website.

Note to media

On 25 February 2009, the Review Panel issued a media release, Tax review invites Australians to have their say, to announce the series of public meetings to listen to people’s views about what parts of the tax and transfer system are working well and what they would most like to see change.

Members of the media are welcome to attend public meetings but, due to limited space, registrations are essential. To register, please send an email to AFTS@treasury.gov.au.

Please note that cameras, video cameras and other recording devices will not be permitted inside the venue to ensure that people feel comfortable providing their views and ideas to the Review Panel.

Media contact: Tony Murray 02 6263 3736

11 March 2009