EY Tax Reform: A better way

The Case for an Australian Tax Reform Commission

Tax Reform: A better way

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Australia’s tax system is failing.

Australia’s tax system is a key determinant of our success as a nation and society. It is a failing system in urgent need of change that – under the current approach to reform – is unlikely to come.

A better institutional response

We need a new process to manage and implement tax reform in Australia.

In a competitive world our tax system is not good enough.

  • It fails to support our home grown businesses
  • It fails to make Australia attractive to foreign investment
  • It is beholden to the short term needs of the electoral cycle

Without change we face years of budget deficits.

Overcoming challenges

Tax reform is challenging because of the political, economic and social minefield through which any tax reform must tread. Australia's current architecture for delivering tax reform is demonstrably deficient in meeting that challenge.

Fit for purpose

At a practical level the tax system also needs urgent repair and maintenance just to ensure that it remains fit for purpose. However, comprehensive institutional reform is required to address the tax system’s entrenched problems.

The ‘better way’

There are constant calls for tax reform from across the community. These calls focus on the “destination” of tax reform. The “pathway” to tax reform receives little consideration.

We recommend institutional and process changes that are urgently required to achieve ongoing sustainable tax reform outcomes. The changes would:

  •  Create new norms for regular reform
  • Improve information flow and consultation
  • Cement responsibility and accountability for tax reform

Our recommendations

  • The Government establish an Australian Tax Reform Commission (the Commission) as the independent research and advisory body on tax reform
  • The Australian Tax Reform Commission be responsible and accountable for four separate but complementary outcomes including:
    • Regular scheduled whole of tax system strategic reviews
    • Consultation on specific policy issues and advice to government
    • Yearly tax reform maintenance reviews
    • Post implementation reviews of legislation and regulations
  • The Federal Government encourages the States to support and participate in the establishment and activities of the Commission