Miscellaneous 1981

The argument in favour of and the opposition to the flat rate of tax for individuals

Source: Australian Tax Research Foundation

Published Date: 1 Jan 1981


The simplification of the personal income tax rate scale has been an important issue in the tax reform debate in Australia over the past decade. As a result, the tax scale has, over the period, been reduced from a 27 step scale to the existing three step scale. However, for some, the process needs to continue in order that the scale is simplified to the ultimate extent of having only one rate. The 'flat rate of tax' proponents seek the introduction of one low rate of tax to be imposed on all income. It is argued that a 'flat tax' would reduce inflation and unemployment, lower health and education costs and, most importantly, greatly increase incentives to work. Whereas the opponents to a 'flat tax' argue that the tax would be extremely unfair and would discriminate against the low income groups.

Recently, the Australian Business Economists and the New South Wales Institute of Political Science conducted a joint seminar on the topic of 'A Flat Rate Tax for Australia'. At the seminar, Mr. Richard Tanner presented the case for the introduction of a flat tax and Mr. David Collins presented the opposing argument. Bearing in mind the interest in the 'flat tax' proposals, the Taxation Institute Research and Education Trust decided to publish the two papers presented providing a convenient reference source of the issues surrounding this controversial topic.

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Miscellaneous 1981

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