Published on 01 Jan 83
by Australian Tax Research Foundation
During the 1970s the governments of many countries began indexing their personal income tax. In the case of Australia, full indexation was introduced on 1 July 1976 but was replaced by discretionary indexation adjustments on 1 July 1978. The policy of tax indexation was dropped in 1981 but was revived as part of the Accord.
In this volume, author Chris Terry from the University of Technology Sydney, states that indexation was adopted because the consequences of inflation on the tax were judged to be inequitable and economically harmful. In his paper Dr. Terry expla ins these effects and shows how they persisted after the cessation of full automatic indexation.
Dr. Terry's paper provides — in a readable fashion — a review of the factors which should be taken into account in determining whether indexation should be a permanent feature of personal income tax.