The 2011 tax forum and the 1985 tax summit

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The 2011 tax forum and the 1985 tax summit

Posted 23/03/2011 by Paige Darby

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On Sunday 20 March 2011, the Treasurer announced in an Economic Note that a Tax Forum would be held on 4–5 October 2011 at Parliament House. This announcement has sparked interest in the potential scope of the tax forum, and the similarities that can be drawn to the Tax Summit held by the Hawke Government in 1985.

The commitment to convene a tax forum was included in letters to Mr Tony Windsor MP and Mr Rob Oakeshott MP as part of the agreement to form a minority government after the 2010 election:
A minority Labor Government will facilitate the discussion of future tax reform as follows:
a) Convene a public forum of experts on taxation and its economic and social effects to discuss the Henry Review, with that meeting to be held before 30 June 2011.
b) Facilitate a debate on tax reform in the Australian Parliament following the forum. 
Priority areas for tax reform as a result of the Australia’s Future Tax System (AFTS) review (otherwise known as the Henry Review) are highlighted in the Treasury’s Red Book, which was prepared by Treasury for the incoming government after the 2010 election. The Red Book recommends (on pages 20–22) that the following areas be prioritised as ‘reform areas which provide the greatest potential contributions to economic performance and to the functionality of the tax system’:
  • State tax reform, including abolishing stamp duties on insurance, housing, commercial property and motor vehicles, reforming payroll and land taxes, and introducing road pricing.
  • Capital income, including moving away from taxation of mobile tax bases (such as capital) and move towards taxation of more immobile tax bases (such as land and resources).
  • Renovation of existing taxes, particularly taxation of trusts and self-managed superannuation funds.
  • Participation, including changes to child care, rent assistance, activity tests, income tests and taxes in order to remove disincentives to participate in the workforce.
  • Complexity, including streamlining the four main tax bases and simplifying tax compliance for the bulk of personal income taxpayers.
The broad potential scope of the tax forum, and its consultation of a variety of stakeholders, has led to many comparisons with the 1985 Tax Summit held by the Hawke Government. The tax summit came about as an election commitment during the 1984 election campaign, and after the re-election of the Labor Government, it was announced that the summit would be held in Parliament House from 1–4 July 1985. Prior to the summit, the Government published a Draft White Paper titled “Reform of the Australian Tax System” which presented the major tax reform issues which would be the basis of discussion at the summit. The summit was also guided by the following nine principles detailed by Prime Minister Hawke:

  • There must be no increase in the overall tax burden, as measured by the share of Commonwealth Government tax revenue in gross domestic product, this year or through the Government's current term in office.
  • Any reform must continue the process already begun by the Government and provide further cuts in personal income tax.
  • Taxation changes must contribute to smashing tax avoidance and evasion.
  • Any reform must lead to a simpler system which therefore all Australians can understand more easily, and which therefore makes tax avoidance and evasion more difficult.
  • Any reform package must result in a tax system which is fairer, so that Australians are only required to pay tax according to their capacity to pay, and the overall system must be progressive.
  • Any tax reform must not disadvantage recipients of welfare benefits and should reduce or remove "poverty traps".
  • If any reform package which includes changes in indirect taxes is contemplated, it must be acceptable to the various groups in the Australian community whose response will determine whether moderation in wage movements can be maintained.
  • Any reform must provide the best possible climate for investment, growth and employment in Australia.
  • Any reform package must have widespread community support, including support at a widely representative National Tax Summit of economic organisations and community groups.
Invitations were sent out on 6 May 1985 to the following groups of people:
  • from the States, six premiers, one Chief Minister, and their supporting ministers
  • the Australian Council of Local Government Associations
  • ACTU Executive
  • 17 employer/self employed groups
  • seven welfare groups
  • six tax academics
  • five organisations listed as ‘other’ and,
  • six members of the Economic Planning Advisory Council (EPAC).
The final list of delegates included:
  • 27 Commonwealth ministers
  • four Democrats Senators (supported by three staff)
  • Premier and Treasurer of NSW (supported by nine advisers)
  • Premier, Treasurer and two Ministers from Victoria (supported by six staff)
  • Premier and Deputy Premier from Queensland (supported by 11 staff)
  • Premier and Minister for Transport from WA (supported by 11 staff)
  • Premier from SA (supported by seven staff)
  • Premier and Minister for Construction from Tasmania (supported by four staff)
  • Chief Minister of the Northern Territory (supported by four staff), and
  • nine members of EPAC.
These government delegates were accompanied by 300 representatives (and their staff) from more than 50 organisations and associations.

The outcomes of the summit were discussed by Treasurer Keating in Ministerial Statements on 19 September 1985 and 17 October 1985. Amongst other things, the summit led to the Government announcing changes to non-cash fringe benefits, living away from home allowances, entertainment expenses and deductibility, capital gains tax, wholesale sales tax, the tax-free threshold, deductions for water conservation, assistance for the film industry, mining deductions, and taxation relief, as well as the proposed introduction of the Australia Card.

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