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A strategic approach to personal income tax reform


There are many examples of reforms to personal income tax in different countries that do not appear to have achieved the success expected of them but have led to unexpected and undesirable outcomes. A possible reason is the ad hoc nature of many reforms made primarily in response to particular circumstances but possibly with insufficient regard to other important matters. These matters include likely economic, political and social effects, the increasing importance of international considerations, administrative constraints and the extent to which the changes are consistent with other aims and objectives of tax systems and government policy more generally. This paper examines the nature of personal income tax reform analysing relevant examples and presenting an Australian/UK comparison. There seems to be considerable scope for improvement in the way income tax systems are reformed. The paper then turns to the nature of a more strategic approach and the advantages it might have for income tax reform in the longer term. The main themes are the ways in which such an approach should take account of the wider context and the necessity of mechanisms to ensure that tax systems continue to achieve their intended purposes in changing circumstances. The processes involved in the development of robust tax strategies are not always simple or easy but are necessary if tax reform is to be achieved without excessive economic, political and social damage.

Author profiles:

Simon is at the University of Exeter, UK and a Visiting Fellow at the Australian National University.
Current at April 2007
Click here to expand/collapse more articles by Simon JAMES.
Associate Research Fellow at the University of Exeter UK.
Current at April 2007
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