Preview

Comparing Australia's Tax System With The Eastern Europe

Powerful Essays
Open Document
Open Document
1578 Words
Grammar
Grammar
Plagiarism
Plagiarism
Writing
Writing
Score
Score
Comparing Australia's Tax System With The Eastern Europe
Abstract

There is a definition of tax in the Webster 's Dictionary--"...a compulsory payment of a percentage of income, property value, sales price, etc. for the support of a government". In theory the collection of taxation should be fair, simple, efficient and neutral.

Australia inherited a convoluted and complex taxation structure from its British Colonial past. Australia 's economy has become more dynamic, efficient and productive over recent decades. However, the tax system has only adapted slowly to these changes. In particular, Australia 's high personal tax rates and low thresholds are uncompetitive by international standards.

Comparing the Australian Income tax system with the Eastern Europe (e.g. Russia), this paper provides an
…show more content…

The criteria of equity, simplicity, efficiency and neutrality are the traditional criteria used to evaluate how effectively a tax system carries out its purpose of raising revenue. Since 1901 successive Australian Governments have struggled to find the "perfect" tax system to achieve those targets.

Nowadays, there are two main types of income taxation system. One is a progressive tax system which the Australian Income taxation system is; the other is a flat tax system which the Eastern Europe (e.g. Russia) uses. Comparing with the Eastern Europe, the Australian Income tax system does not have only one single rate and has hundreds of deductions, credits, exclusions, etc. The Australian Income tax system can not produce the desired results. It sinks further into the mire of confusion, clouded by deception and self interest. Following is the brief review.

1. Fairness or Equity

The tax matter--fairness is an ideal exceedingly difficult to define and harder still to measure. The objective view of fairness is a matter of perspective, one person 's viewpoint varies form
…show more content…

In a recent article in the National Tax Journal, Professor James Buchanan, a Nobel laureate, argued that the most "politically efficient" system of taxation "would involve a flat-rate, proportional tax on all sources of income, without deduction, exclusion or exemption."

2. Simplicity

At least since Adam Smith, simplicity in taxation has been considered a virtue. By simplicity we mean not only that the tax system is conceptually easy to understand, but also that the cost of complying with its requirements is low.

The Australian Income tax system fails both tests. The Australian income tax system uses two acts concurrently, the ITAA 19362 and the ITAA 19973, is sufficient evidence that the legislators appear to have taken the reverse view of simplicity. The principal cost is the time we must spend keeping records, filing forms and paying the tax. A government study estimated that Australians spend some billions hours per year just doing


You May Also Find These Documents Helpful

  • Powerful Essays

    Nt1310 Unit 1 Assignment 1

    • 4963 Words
    • 20 Pages

    Income tax only works in developed countries – Australia has a heavily reliance on income tax.…

    • 4963 Words
    • 20 Pages
    Powerful Essays
  • Satisfactory Essays

    Re: P11-2

    • 551 Words
    • 3 Pages

    Read the Tax Court of Canada case Min Shan Shih v the Queen 2000 DTC 2072 and explain in your own words the reason for the decision in the case.…

    • 551 Words
    • 3 Pages
    Satisfactory Essays
  • Good Essays

    References: Jones, Sally, and Shelley Rhoades-Catanach (2014). Principles of taxation for business and investment planning, 2015 edition, 18th edition. [VitalSource Bookshelf version]. Retrieved from http://devry.vitalsource.com/books/1259544486/epubcfi/6/24…

    • 768 Words
    • 3 Pages
    Good Essays
  • Good Essays

    Legt2751 Notes for Midsem

    • 2002 Words
    • 9 Pages

    Australia - Income tax introduced in 1915 (due to WW1): Income Tax Act 1915 (Cth)…

    • 2002 Words
    • 9 Pages
    Good Essays
  • Good Essays

    ACC 202 WEEK 2 ASSIGNMENT

    • 828 Words
    • 4 Pages

    From as long as I could remember Taxes have always been apart of our daily lives. Taxes can often be a big burden for most, they can also be a help and used for many other functions. If it was not for taxation our roads, public buildings would be a complete mess. Our emergency services such as, law enforcement, EMT, and Fire/rescue thrive off of tax dollars, many of our healthcare offices also use tax payers money to stay open. The taxing process from distribution to collecting them has people on the fence with different point of views. In this paper I will be discussing the questions raised about taxation.…

    • 828 Words
    • 4 Pages
    Good Essays
  • Powerful Essays

    Mitchell, D. (2010, April 12). Eliminate Tax Brackets and Complicated Forms With a Flat Tax . US News. Retrieved December 11, 2010, from http://politics.usnews.com/opinion/articles/2010/04/12/eliminate-tax-brackets-and-complicated- forms-with-a-flat-tax.html…

    • 1187 Words
    • 5 Pages
    Powerful Essays
  • Better Essays

    Adam Smith’s the wealth of nations was published in 1776, in this book, he outlined four desirable tax system characteristics. Andy & Lynne (2011) stated that these ‘canons of taxation’ can be re-stated into more modern terms as equity, certainty, convenience and efficiency. and there are also two common additions – simplicity and flexibility which proposed by other writers.…

    • 1289 Words
    • 6 Pages
    Better Essays
  • Good Essays

    (#9) There should not be any tax loopholes for the rich or the poor. The system in not ‘fair’ if it is enables someone to get out of doing what they are supposed to do through loopholes. By weeding out the loopholes and putting a stop those who utilize them the tax system would become more impartial. Everyone, should pay their fair share of taxes if you have more you should pay more and if you have less you should be paying less.…

    • 1006 Words
    • 5 Pages
    Good Essays
  • Powerful Essays

    tax notes

    • 15836 Words
    • 64 Pages

    The determination of a taxpayer’s ordinary income depends on whether the taxpayer is an Australian or foreign resident and the source of the income. The income tax rate applied for individuals differs between Australian and foreign residents.…

    • 15836 Words
    • 64 Pages
    Powerful Essays
  • Good Essays

    The Flat Tax

    • 492 Words
    • 2 Pages

    Taxation has always been a major controversy. Just like any major corporation, the government is constantly looking to raise revenue. The easiest and fairest way to do this is by taxing the people. However, how the people will be taxed is always an issue.…

    • 492 Words
    • 2 Pages
    Good Essays
  • Powerful Essays

    Answer: Governments are often faced with trade-offs between equity and efficiency goals of tax policy. There is an abundance of examples of conflicts between equity and efficiency inherent in the taxation of income generating activity. Specifically, the choice of progressive tax rate…

    • 923 Words
    • 4 Pages
    Powerful Essays
  • Good Essays

    “No taxation without representation” was a common protest over two hundred years ago when the then thirteen colonies were still under the rule of England. Since then America has gained its freedom from England, experienced civil war, abolished slavery, fought in two world wars, and a hand full of other conflicts all around the world, all while becoming the most powerful economy in the world accompanied with the most powerful military. With all that has changed in the world, and The United States over the last two centuries, one constant has remained, taxes. As we are fast approaching a presidential election in November of 2012 tax reform appears to remain a very trendy topic. As President Obama recently released his tax returns from 2011 following the release of GOP’s candidate Mitch Romney’s return, reformation of U.S. tax law has resurged to the surface once again, this time not because of lack of representation, but because of the unfair gaps that it is creating in society.…

    • 1221 Words
    • 5 Pages
    Good Essays
  • Better Essays

    Tax Reform

    • 1577 Words
    • 7 Pages

    Gleckman, H. (2011, 10 31). A Tax Reform Proposal. Retrieved February 07, 2012, from Forbes Business: http://www.forbes.com/sites/beltway/2012/01/31/a-tax-reform-proposal-that-might-work-bring-on-the-vat/2/…

    • 1577 Words
    • 7 Pages
    Better Essays
  • Better Essays

    Flat Tax System Analysis

    • 1190 Words
    • 5 Pages

    Only a few American citizens take time to understand the complicated tax system in the United States, although everyone is affected by it daily. Whether it is taxes on income, housing, or sales, taxes are extremely prominent in our society and as the people being taxed we have a responsibility to understand the basic tax laws in the United States. Throughout this week in POLS 2302 I have learned about the tax system including how to advise others about tax brackets, marginal taxes, different types of taxes, and government involvement in the American tax system.…

    • 1190 Words
    • 5 Pages
    Better Essays
  • Good Essays

    The courts play a basic and central role as interpreters of the basic tax code and the specific anti-tax avoidance elements within it. Their approach to this task may have a profouund influence on the scope of tax avoidance activity and the nature of the government’s response to avoidance.…

    • 377 Words
    • 2 Pages
    Good Essays