Well, once again Peter Costello has failed to deliver any significant tax reform. Why? Well, read on.
Tax reform is not about tweaking parameters to the system, such as the income tax rates, or even about abolishing or introducing taxes (such as the GST – which was a big change, after all).
Tax reform should be about simplifying the tax code. The tax code is too complex – with over 9,500 pages even without things like the Family Tax Benefit (which is actually a social security program). Tax reform should be measured by how many pages the tax code is shrunk by over all. A simpler tax system would be fairer largely because it would be understandable, people would know how the tax burden is distributed, and it would be harder to drive through loopholes in the system. With these conditions in place, it would be easier to engage people in fundamental questions such as: should we have income tax? Is capital gains tax appropriate? Why are savings taxed?
Not one budget that has been introduced by Costello has shrunk the tax code. Every single one has increased it, with the biggest one being the introduction of the GST. Go figure.