Comparing Australia's Tax System With The Eastern Europe
Abstract
There is a definition of tax in the Webster 's Dictionary--"...a compulsory payment of a percentage of income, property value, sales price, etc. for the support of a government". In theory the collection of taxation should be fair, simple, efficient and neutral.
Australia inherited a convoluted and complex taxation structure from its British Colonial past. Australia 's economy has become more dynamic, efficient and productive over recent decades. However, the tax system has only adapted slowly to these changes. In particular, Australia 's high personal tax rates and low thresholds are uncompetitive by international standards.
Comparing the Australian Income tax system with the Eastern Europe (e.g. Russia), this paper provides an …show more content…
The criteria of equity, simplicity, efficiency and neutrality are the traditional criteria used to evaluate how effectively a tax system carries out its purpose of raising revenue. Since 1901 successive Australian Governments have struggled to find the "perfect" tax system to achieve those targets.
Nowadays, there are two main types of income taxation system. One is a progressive tax system which the Australian Income taxation system is; the other is a flat tax system which the Eastern Europe (e.g. Russia) uses. Comparing with the Eastern Europe, the Australian Income tax system does not have only one single rate and has hundreds of deductions, credits, exclusions, etc. The Australian Income tax system can not produce the desired results. It sinks further into the mire of confusion, clouded by deception and self interest. Following is the brief review.
1. Fairness or Equity
The tax matter--fairness is an ideal exceedingly difficult to define and harder still to measure. The objective view of fairness is a matter of perspective, one person 's viewpoint varies form …show more content…
In a recent article in the National Tax Journal, Professor James Buchanan, a Nobel laureate, argued that the most "politically efficient" system of taxation "would involve a flat-rate, proportional tax on all sources of income, without deduction, exclusion or exemption."
2. Simplicity
At least since Adam Smith, simplicity in taxation has been considered a virtue. By simplicity we mean not only that the tax system is conceptually easy to understand, but also that the cost of complying with its requirements is low.
The Australian Income tax system fails both tests. The Australian income tax system uses two acts concurrently, the ITAA 19362 and the ITAA 19973, is sufficient evidence that the legislators appear to have taken the reverse view of simplicity. The principal cost is the time we must spend keeping records, filing forms and paying the tax. A government study estimated that Australians spend some billions hours per year just doing
There is a definition of tax in the Webster 's Dictionary--"...a compulsory payment of a percentage of income, property value, sales price, etc. for the support of a government". In theory the collection of taxation should be fair, simple, efficient and neutral.
Australia inherited a convoluted and complex taxation structure from its British Colonial past. Australia 's economy has become more dynamic, efficient and productive over recent decades. However, the tax system has only adapted slowly to these changes. In particular, Australia 's high personal tax rates and low thresholds are uncompetitive by international standards.
Comparing the Australian Income tax system with the Eastern Europe (e.g. Russia), this paper provides an …show more content…
The criteria of equity, simplicity, efficiency and neutrality are the traditional criteria used to evaluate how effectively a tax system carries out its purpose of raising revenue. Since 1901 successive Australian Governments have struggled to find the "perfect" tax system to achieve those targets.
Nowadays, there are two main types of income taxation system. One is a progressive tax system which the Australian Income taxation system is; the other is a flat tax system which the Eastern Europe (e.g. Russia) uses. Comparing with the Eastern Europe, the Australian Income tax system does not have only one single rate and has hundreds of deductions, credits, exclusions, etc. The Australian Income tax system can not produce the desired results. It sinks further into the mire of confusion, clouded by deception and self interest. Following is the brief review.
1. Fairness or Equity
The tax matter--fairness is an ideal exceedingly difficult to define and harder still to measure. The objective view of fairness is a matter of perspective, one person 's viewpoint varies form …show more content…
In a recent article in the National Tax Journal, Professor James Buchanan, a Nobel laureate, argued that the most "politically efficient" system of taxation "would involve a flat-rate, proportional tax on all sources of income, without deduction, exclusion or exemption."
2. Simplicity
At least since Adam Smith, simplicity in taxation has been considered a virtue. By simplicity we mean not only that the tax system is conceptually easy to understand, but also that the cost of complying with its requirements is low.
The Australian Income tax system fails both tests. The Australian income tax system uses two acts concurrently, the ITAA 19362 and the ITAA 19973, is sufficient evidence that the legislators appear to have taken the reverse view of simplicity. The principal cost is the time we must spend keeping records, filing forms and paying the tax. A government study estimated that Australians spend some billions hours per year just doing