Taming Complexity in Australian Income Tax
Sydney Law Review, Vol. 25, No. 4, pp. 467-505, 2003
40 Pages Posted: 27 Aug 2010
Date Written: December 1, 2003
‘Simplification’ has been the mantra of tax reformers and tax deformers since the late 1950s and has frequently been cited as a rationale for tax changes in the closing years of the twentieth century and the opening years of the twenty-first. The near universal agreement by tax critics that simplicity is an object of tax reform is not mirrored by universal agreement as to what simplicity entails. This paper explores the phenomenon of complexity in the Australian income tax. The paper considers the causes of complexity, reviewing the possible contributions of the parties most closely connected to the tax system - the judges who interpret the legislation, the tax advisers who work with it, the drafters who write it, the Treasury that designs it, and the legislature that enacts it as law. The paper concludes that all parties must bear some blame for the complexity but prime responsibility falls on the legislature on two counts. First, the legislature has failed to eliminate the irrational distinctions in the law to which most complexity can be traced and, second, it has added new layers of complexity by using the tax system as a spending tool to distort market and social behaviour.
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