Henry Tax Review Explained

The Australia's Future Tax System Review, informally known as the Henry Tax Review was commissioned by the Rudd Government in 2008 and published in 2010. The review was intended to guide tax system reforms over the next 10 to 20 years.

Remit

The review was commissioned as one of the specific outcomes from the Australia 2020 Summit held in April 2008.

The review was a "root and branch" review, restricted only in that it could not consider increasing the rate or broadening the base of the Goods and Services Tax, imposing tax on superannuation payments to retirees over 60 years of age, or already-announced personal income tax changes.

Panel

The review panel members were:[1] [2]

Recommendations

The report made 138[3] recommendations, under nine themes.[4]

  1. Concentrating revenue raising on four efficient tax bases: personal income, business income, private consumption, and economic rents from natural resources and land. Other taxes may be retained if they serve a specific policy purpose such as discouraging smoking or traffic congestion. Taxes fitting into none of these categories should eventually be abolished.
  2. Configuring taxes and transfers to support productivity, participation and growth.
  3. An equitable, transparent and simplified personal income tax: a much higher tax-free threshold (around AUD 25,000), only two tax brackets, and a simplification of superannuation, deductions and offsets.
  4. A fair, adequate, and work supportive transfer system.
  5. Integrating consumption tax compliance with business systems.
  6. Efficient land and resource taxation.
  7. Completing retirement income reform and securing aged care.
  8. Toward more affordable housing: substantially increase rent assistance, gradually move to a uniform land tax and remove transfer taxes (stamp duty), and gradually move to a neutral treatment of rental and owner-occupied housing.
  9. A more open, understandable and responsive tax system.

Reception

Rudd government

Rudd endorsed and implemented only 3 of the 138 recommendations.[5] [6]

The major item from the Henry Review implemented by the Rudd Government was the move to create a resources Super Profit Tax. The proposal was highly controversial, and has been suggested as the main reason why Rudd lost power. Following his replacement by Julia Gillard as Prime Minister, the proposed tax was replaced by a Mineral Resource Rent Tax.[7] Most of the remaining recommendations were not implemented.

Commentators

Former Liberal Leader John Hewson has been supportive.[8]

External links

Notes and References

  1. Australia’s future tax system, Consultation paper, December 2008
  2. http://taxreview.treasury.gov.au/content/Content.aspx?doc=html/review_panel.htm
  3. Web site: Australia's Future Tax System: Final Report: Chapter 12 . 21 September 2010 . 12 September 2015 . https://web.archive.org/web/20150912193804/http://taxreview.treasury.gov.au/content/FinalReport.aspx?doc=html%2Fpublications%2Fpapers%2FFinal_Report_Part_1%2Fchapter_12.htm . dead .
  4. http://taxreview.treasury.gov.au/content/FinalReport.aspx?doc=html/publications/papers/Final_Report_Part_1/executive_summary.htm Australia's Future Tax System: Final Report: Executive Summary
  5. Book: Stuart . Nicholas . Rudd's way: November 2007 - June 2010 . 2010 . Scribe Publications . Melbourne . 9781921640575 . 256.
  6. Book: Aulich . Chris . The Gillard Governments . 2014 . Melbourne University Press . Melbourne . 978-0522864557.
  7. Web site: No regrets over ditched RSPT: Henry. 5 July 2010.
  8. Web site: John Hewson interview: "This government has to get out of its old ways of thinking". on ausbiz . www.ausbiz.com.au.

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