Australian Tax Forum

Australian Tax Forum Vol 28 (3) 2014
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Australian Tax Forum is a prestigious quarterly journal with the objective of providing discussion on issues in tax policy, law and reform amongst tax professionals.

It is an essential reference source for understanding and contributing to the development of taxation systems worldwide. Australian Tax Forum is aimed at those who want to influence the future development of tax policy. It is an important journal for tax policy makers, academics and libraries.

Articles from the current issue:

  • The devil is in the detail: The distributional consequences of personal income tax sharing in the Australian federation Add to cart

    01 Dec 2015

    The March 2014 Report of the National Commission of Audit and the Commonwealth’s tax reform and federalism discussion papers published in the first half of 2015 provided some early insights into the Coalition Government’s agenda for reforming the national tax system and fiscal federalism. One proposal with potential to facilitate state tax reform and potential to partly address the vertical fiscal imbalance in the Australian federation is to encourage states and territories to introduce personal income tax levies or surcharges on the same tax base as the federal income tax. Granting states access to the personal income tax base could address a number of widely recognised policy problems. A modest state personal income levy could be used to replace inefficient state level transaction taxes, improving efficiency and equity within the national tax system. A more ambitious option would be for the Commonwealth to cut the federal income tax, creating the tax space for the states to use the federal income tax base to raise a significant portion of revenue. However, if such a levy is based on taxpayers’ state of residence (which is required to create inter-jurisdictional competition), then, based on the experience of other federations such as the United States and Canada, per capita revenue will vary considerably from state to state. This article outlines these policy design issues before using ATO income tax data to present an analysis of how revenues from different state income tax levies and surcharges would be distributed across the Australian federation and what issues this raises for the introduction of a state income tax in Australia.

  • Gender impact analysis and the taxation of retirement savings in Australia Add to cart

    01 Dec 2015

    Gender impact analysis of the tax transfer system makes gender issues in policies and budgets visible and enables their complexities to be revealed. By doing so, it facilitates the development of more equitable and efficient alternatives. This article provides a gender impact analysis of Australia’s taxation and expenditure arrangements for superannuation and the age pension. By including both paid and unpaid work in the analysis, it identifies a number of critical features of the tax and transfer system that foster gender inequality. The article concludes that the gender impacts of the current policy on retirement savings and income should be addressed through a range of policy and budgetary changes. In particular, it advocates re-balancing the resourcing of superannuation tax concessions and the age pension, improving the rate of the age pension and removing the existing barriers to women’s workforce participation that have been created by the income tax/family benefit system, including high childcare costs.

  • Taxing personal capital gains in Australia: An alternative way forward Add to cart

    01 Dec 2015

    This article proposes the abolition of the 50% capital gains tax (CGT) discount for personal taxpayers and its replacement with a non-cumulative annual tax-free threshold for the taxation of capital gains. This reform, it is argued, would considerably enhance the equity, efficiency and simplicity of the Australian CGT regime, as well as providing a positive revenue outcome for the Treasury.

  • Australian state income taxation: A historical perspective Add to cart

    01 Dec 2015

    Contrasting with social insurance taxes and the key revenue raising role of VAT for northern European welfare states, Australia’s income tax has funded expansion of Australia’s social security system. The uniform income tax plan of 1942 unified Australia’s system of income taxes, and was central to funding the introduction of Australia’s unique social security system, establishing national child endowment, unemployment benefits and the widows’ pension in 1944.

    This article will describe the increasing reliance of Australian states on income taxation during the period 1915 to 1942, and the constraints arising from the increasing mobility of taxpayers and post-Federation economic integration; show how these states’ income tax policies responded to the economic shocks of the Depression which depleted the states’ revenues contemporaneously with increasing demands on governments to provide social protection; and identify how the concepts, design and administration of state income taxes were embedded in Australia’s national tax and social security systems established between 1942 and 1944.

  • The central role of a well-designed income tax in “the modern economy” Add to cart

    01 Dec 2015

    Two of the most fundamental changes in the Australian economy since the middle of the 20th century have been the dramatic fall in fertility and the rise in female labour force participation. Over the same period, the progressivity of the income tax has declined significantly, despite rising inequality, and the individual as the tax unit has been replaced by a system of “quasi-joint” taxation for families, creating high effective tax rates for partnered mothers as second earners. In this article, we draw on household survey data to show that this direction of reform has been counterproductive, with strong negative effects on female labour supply and saving and, in turn, on productivity and the tax base. The analysis highlights the efficiency merits of a well-designed, individual based income tax over consumption taxation in “the modern economy”.

  • The defective jigsaw Add to cart

    01 Dec 2015

    A number of highly visible projects have been undertaken in Australia since the early 1990s in an endeavour to simplify the income tax. Most of the focus has been on linguistic measures — changing the words used in drafting tax statutes, the way that text is presented to readers and the degree of precision with which rules are expressed. This article focuses on a different and neglected source of confusion — the way individual regimes within the tax legislation interact. Drafting experiments do not, and cannot, address this source of confusion, but it remains as great a source of difficulty as the form in which text is prepared and presented. This article analyses and classifies common instances of the problem, explores how they arise and examines the kinds of complexity that results. The article argues that new projects focusing on structural design can accomplish much, perhaps even more, than past projects focusing on language.

  • 100 years of the minimum wage and the Australian tax and transfer system: What has happened, what have we learnt and what are the challenges? Add to cart

    01 Dec 2015

    The Australian minimum wage, as with Commonwealth income tax, had its origin in the early decades of federation. This article reviews the development of these, along with government transfers, to find whether, in the lessons of the past 100 years, there may be insights into the challenges for the income tax system in the next century. Over the last century, the role of the minimum wage has changed. Most significant has been its transition from a family wage to a wage for a single person. While the income tax system has at times played a role in seeking to achieve horizontal equity, this has increasingly been achieved through transfer payments. The history of these changes highlights the extent to which features of systems can become locked-in, the long time scales associated with achieving reform, the risks of losing achievements through inertia, and the need for, but difficulty in achieving, coordination across the tax and transfer system, and with wages.

  • Corporate income tax: what is it good for? Add to cart

    01 Dec 2015

    This article attempts a top-down analysis of what corporate income tax is capable of achieving in terms of the public good. It considers how well the current configuration of the tax fares when weighed against the principles of equity, efficiency and simplicity. These principles, if carefully defined, provide an invaluable opportunity to think about the theoretical and practical limitations of any individual tax. Applying these principles to the corporate income tax results in the inescapable conclusion that it cannot be described as being an equitable, efficient or simple tax. However, given the need for incremental reform of our tax laws, the corporate income tax does have at least one saving grace: it can be a useful instrument of social and economic policy. 

  • Looking forward at 100 years: Where next for the income tax? Add to cart

    01 Dec 2015

    In 2015, Australia’s Commonwealth income tax reached its first century. The Income Tax Assessment Act No. 34 of 1915 and accompanying Income Tax Act No. 41 of 1915 were assented to on 13 September 1915, enacted “by the King’s Most Excellent Majesty, the Senate, and the House of Representatives of the Commonwealth of Australia” and effective for the fiscal year commencing 1 July 1915.