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07 Aug 088 Treasurer announces release of Treasury Discussion Paper

In a media release issued on 6 August 2008, the Treasurer, Wayne Swan, announced the launch of the Australia’s Future Tax System (AFTS) Discussion Paper by Treasury Secretary Dr Ken Henry. The AFTS review was announced by the Treasurer in the 2008-09 Budget: see 2008 TAXVINE No 18 (7) (13 May 2008) and is chaired by Dr Henry.

The AFTS review will encompass Australian Government and state taxes, except the rate and base of the GST, and interactions with the transfer system, and will consider:

  • The balance of taxes on work, investment and consumption and the role for environmental taxes;
  • Further enhancements to the tax and transfer system facing individuals, families and retirees;
  • The taxation of savings, assets and investments, including the role and structure of company taxation;
  • The taxation of consumption and property and other state taxes;
  • Simplifying the tax system, including the interactions between federal, state and local government taxes; and
  • Inter-relationships between the elements of the tax system, as well as the proposed emission trading system.
The AFTS Review will also examine the adequacy of pensions and retirement incomes. The Review Panel will provide its final report to the Treasurer by the end of 2009.

The Foreword to the Discussion Paper states as follows:

"The paper describes Australia’s tax and transfer systems from a factual and analytical perspective to inform public discussion. While this paper provides comprehensive coverage, it is not intended to be exhaustive, nor is it intended to limit discussion to the issues canvassed in this paper.

This paper does not put forward recommendations for reform. That is the task of the Review Panel. The Review Panel will set out its plan for consultation and some key focusing questions by the end of August 2008. The questions will help guide the initial consultation and open the way for the community to tell the Panel what it thinks are the key issues to be considered in this review of Australia’s tax and transfer systems."

Under the heading "The mix of taxes on work, investment and consumption" in the Executive Summary, the Discussion Paper states:

"Most countries have a tax system based on a mix of taxes on labour income, capital income and consumption.

Australia’s tax mix is slightly skewed towards direct taxes on labour income. This accounts for around 40% of revenue. Taxes on capital income account for about 33%, while taxes on consumption account for 27%.

Compared with other OECD countries, Australia has a low share of tax revenue from labour income and the greatest reliance on tax revenue from capital. In part, this reflects the relatively greater contribution of corporate income taxes to total tax revenue."

For a copy of the Treasurer's media release, No 2008/093, 6 August 2008, go here

For a copy of the Discussion Paper, go here and click on Architecture of Australia's tax and transfer system (pdf 2MB)

For a copy of the transcript of a joint press conference with the Treasurer and Dr Henry at the Commonwealth Parliamentary Offices, Melbourne, 6 August 2008, go here

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