Time to remember the Henry review

Australia's tax system is a mess. Quite shambolic in fact, with lots of concessions to special interest groups that only make sense in the pursuit of votes. Undoing this mess is politically difficult, because it will lose votes.

The Henry Review of 2010 tried to make sense of the system and suggest sensible reforms. Henry's ideas were welcomed, but little has been done to implement them, except for the changes that accompanied the Carbon Tax (such as the significant rise in the tax free allowance).

Now Mr Henry has suggested that the government might like to look at his proposals again as they try to tackle what they have termed a 'budget emergency'. 

Among other things Henry suggested that GST should be widened and raised. Not a popular move at all. However his point was that taxes should be simple and fair, and a sales tax is both transparent and simple, although not always fair as it is usually regressive.

It would be a good opportunity to remember what the Henry Review suggested and use it as a yardstick to judge any current proposals. the Executive Summary is linked below.

Here is something to think about. What sort of tax system allows the authorities to knowingly take more tax from a person than they owe and then makes them claim their own money back up to a year later? And what sort of tax system allows a landlord to claim tax relief on a loss, even when they bought a property knowing they would make a loss on the rental? The answer is Australia's tax system.

The Executive summary of the Henry Review is here

The Guardian current news item on Henry is here