Senator Andrew Murray
Democrats Senator for Western Australia
Australian Democrats spokesperson for Taxation, Finance & Corporate Affairs Dated: 27 February 2006
Press Release Number: mfsragjg
Portfolio: Taxation, Finance & Corporate Affairs
More from Senator Andrew Murray on Taxation, Finance & Corporate Affairs
Time to Redsign the Income Tax System The Australian Democrats today reiterated their belief that structural income tax reform is vital to the well being of Australia. The income tax system is complex, inefficient and inequitable.
"The Inquiry announced yesterday by the Treasurer may turn out to be a step in the right direction but will be a pointless exercise if it ends up being simply a 'desktop' report," said Senator Murray, Democrats Tax Spokesperson.
"The problem with Mr Costello's approach is that in contrast to the approach taken on the GST, the New Tax System, and the Business Tax System, he has seen income tax change to be solely part of the budget process.
"Across the whole of the political and public policy spectrum, there is strong agreement that reform is needed, not just tax cuts, and that the income tax system needs redesigning, not just fine tuning.
"The Democrats five pillars structural income tax reform plan states that reform should be implemented in a phased manner over a number of years.
"The plan consists of raising the tax free threshold significantly, indexing the rates; broadening the base; reforming the tax welfare intersects; and ensuring nominal tax rates remain fair and competitive.
"The Democrats will not prejudge this Inquiry - our judgement will depend on its outcomes," Senator Murray concluded.
The Australian federal treasurer, Peter Costello, has announced a study to compare the Australian taxation system with those of other countries. It will include overall tax levels, as well as indirect tax, income tax and company tax systems. Mr Costello says that the results are intended to inform discussion of the future of the tax system.

"The aim of the study is to provide a public document that compares Australian taxes to those in other countries. This will identify those areas where Australia leads comparable countries and those areas where it lags. It will enable a focus on the most important areas," Mr Costello said in a media release.

The study will be lead by Mr Richard (Dick) Warburton and Mr Peter Hendy. Mr Warburton is Chairman of Caltex Australia Ltd, and has been Chairman of the Board of Taxation since its inception in September 2000. According to its website, the Board of Taxation is "a non-statutory advisory body charged with contributing a business and broader community perspective to improving the design of taxation laws and their operation."

The Australian Democrats welcomed the study but warned that nothing would be achieved without serious reform of the tax system.

"The Inquiry announced yesterday by the Treasurer may turn out to be a step in the right direction but will be a pointless exercise if it ends up being simply a 'desktop' report," said Senator Murray, Democrats Tax Spokesperson.

"The problem with Mr Costello's approach is that in contrast to the approach taken on the GST, the New Tax System, and the Business Tax System, he has seen income tax change to be solely part of the budget process. Across the whole of the political and public policy spectrum, there is strong agreement that reform is needed, not just tax cuts, and that the income tax system needs redesigning, not just fine tuning."