The Compliance Costs of Taxation in Australia and Tax Simplification: The Issues

Abstract

This paper identifies six phases in the development of the compliance costs of taxation, in an Australian context. Estimates of the compliance costs of personal and public companies' income taxation are presented, and an international comparison cautiously made. Major policy issues related to compliance costs are considered. Cost-reducing measures are identified and classified. Specific proposals for Australia's income-tax system are considered. The paper concludes that the compliance costs of income taxation in Australia are high, and that simplification of income tax is likely to lead to significant economic resource savings. The prognosis for reform is mixed, but the overall view is not optimistic.