Principles for tax reform

The tax system should support a strong and smart economy as well as a fairer society that provides opportunity for all Australians. It should be sustainable, provide revenue for high quality public services, be robust to changing practices and not unduly burden Australians with red tape.

A Stronger Tax System

A stronger tax system is one that is sustainable and raises revenue in the most efficient way. It should provide a secure revenue base to support the provision of the quality public services that Australians value and expect, such as world class education, health and disability support services, particularly as we confront the challenges of an ageing population.

A stronger tax system is also a simpler tax system. Unnecessary complexity reduces investment and hampers innovation, detracting from productivity and growth. Complexity reduces the time businesses and individuals can devote to other, more beneficial, activities such as exploring new commercial opportunities, securing a better job or spending more time with their family. It is also unfair as it disadvantages those who are less able to deal with it, particularly low income earners and small businesses.

A Smarter Tax System

A smarter tax system assists the productive allocation of resources in the economy, including by supporting entrepreneurial activity and sensible risk taking, so that businesses can pursue new investment opportunities and create employment.

A smarter tax system, alongside a targeted transfer system, should as far as possible improve incentives to participate in the workforce. It should also ensure individuals can receive a fair reward for the effort they put in to working, saving and investing.

A Fairer Tax System

A fairer tax system needs to be consistent with our egalitarian spirit, so that those with means contribute their fair share. Tax concessions should be appropriately targeted and tax rules should be updated in response to changing circumstances to ensure they continue to achieve their original policy intent.

Australians also expect that companies, including multinational companies, will pay their fair share of tax, to contribute to society more broadly. If some companies do not pay their fair share of tax, a higher tax burden will fall on other taxpayers, including Australian families. Businesses that do the right thing will be at a competitive disadvantage and confidence in our tax system will be eroded.