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Tax policy simplification: An evaluation of the proposal for a standard deduction for work related expenses


This article suggests that the proposals for a standard deduction for work related expenses and the costs of managing tax affairs of individual taxpayers, due to be introduced from 1 July 2012, are flawed from a number of perspectives. After briefly reviewing international practice and examining the proposed policy option for Australia in some detail, the authors suggest that it might not be appropriate policy to provide such deductions in the first place.

The article then identifies a number of difficulties associated with the policy design of the standard deduction, focusing on three specific issues: the take up ratio of the proposed standard deduction option; the revenue impact; and the potential simplification impact of the proposed policy. In the concluding section, some modifications or alternatives to the currently proposed standard deduction are suggested. Overall, it is concluded that the proposed policy will not achieve its policy objectives, and that - in particular - it is very unlikely that there will be any significant simplification outcomes as a result of the policy proposal.

Author profiles:

Author Photo - Christopher Evans
Prof Christopher Evans
Chris is Professor of Taxation and former Head of the Australian School of Taxation (Atax) at UNSW Australia. He specialises in comparative taxation, capital and wealth taxation, tax law and administration, tax policy and reform. His PhD from UNSW was a comparative study of the operating costs of taxing capital gains. He also holds a master’s degree in European Political Integration from Leicester University and a Bachelor’s honours degree in Economics from London University, as well as postgraduate educational qualifications from Leeds University. He has researched and published extensively in taxation, and is a co-author of Australian Taxation Law and Cooper & Evans on CGT. He is General Editor of Australian Tax Review and Editorial Board member of other journals. He has served on a number of governmental and professional body committees and working parties in Australia and overseas, including the UK’s Mirrlees Committee and the HMRC International Panel on tax administration. Current at 04 July 2014 Click here to expand/collapse more articles by Chris EVANS.
Binh is an Associate Professor, School of Taxation and Business Law, UNSW and Senior Fellow, Taxation Law and Policy Research Institute, Monash University.
Current at 01 May 2014
Click here to expand/collapse more articles by Binh TRAN-NAM.
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