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.
Australian Bureau of Statistics, 1991, Price Indices: Consumer Price Index, DX Package, Econdata Pty.
2.
Arnold, B.J., 1990, The process of tax policy formulation in Australia, Canada and New Zealand, Australian Tax Forum, 7, 4, 379–394.
3.
Asprey Report, 1975, Taxation Review Committee: Full Report [Canberra, Australian Government Publishing Service(AGPS)].
4.
Australian Financial Review, 1992, Complexity in simplifying tax law, 8 October, p.9.
5.
Australian Taxation Office, 1980/81, 1989/90, 1990/91 and 1991/92, Annual Reports (Canberra, AGPS).
6.
Australian Taxation Office, 1986/87, Taxation Statistics (Canberra, AGPS).
7.
Bascand, G.M. and C.D. Trengove, 1990, Analysis of tax reform options, in: J.G. Head and R. Krever, eds, Flattening the Tax Rate Scale: Alternative Scenarios and Methodologies (Melbourne, Longman Professional).
8.
Beddall Report, 1990, Report of the House of Representatives Standing Committee on Industry, Science and Technology, Small Business inAustralia: Challenges, Problems and Opportunities (Canberra, AGPS).
9.
Blumenthal, M. and J. Slemrod, 1992, The compliance cost of the US individual income tax system: a second look after tax reform, National Tax Journal, 45, 185–202.
10.
Boucher, T., 1991, Tax simplification: some different dimensions, An address by the Commissioner of Taxation to the Monash University Law School Foundation, Melbourne, 3 September. For an edited summary see:Taxation In Australia, 1991, The simplification debate: too simplistic? 26, 5, November, 277–282.
11.
Budget Statement Paper No. 1, 1991 (Canberra, AGPS).
12.
Cox, D., 1988, Panel discussion of Slemrod 1988, in: Internal Revenue Service Conference Report, Change and Complexity as Barriers to Taxpayer Compliance, Washington D.C., IRS Document 7302, 6–89.
13.
Dodd, T., 1990, Simplifying a taxing system, Australian Financial Review, 27 April, p.17.
14.
Dymond, J., 1992, Tax reform 1990–91: government 1, taxpayers nil; Part 3: self-assessment, Taxation in Australia, 26, 8, March, 429–436.
15.
Freebairn, J.W., 1990, Flattening the tax rate scale: an Australian perspective, in: J.G. Head and R. Krever, eds, Flattening the Tax Rate Scale: Alternative Scenarios and Methodologies (Melbourne, Longman Professional).
16.
Godfrey, B., 1991, Tax compliance and costs to the community: issues and directions, An address by the Second Commissioner of Taxation to the Committee for Economic Development, 6 September.
17.
Government Response to the Report of the House of Representatives Standing Committee on Industry, Science and Technology, 1990, Small Business in Australia: Challenges, Problems and Opportunities [the Beddall Report] (Canberra, AGPS).
18.
Grbich, Y., 1990, Operational strategies for improving Australian tax legislation, Federal Law Review, 19, 266–306.
19.
Grbich, Y. and M. Walker, 1988, The tax code needs rewriting, Australian Tax Forum, 5, 3, 385–394.
20.
Head, J.G., 1991, Taxation issues of the 1990s, Australian Tax Forum, 8, 1, 1–48.
Internal Revenue Service Conference Report, 1988, Change and Complexity as Barriers to Taxpayer Compliance, Washington D.C., IRS Document 7302, 6–89.
23.
Johns, B.L., W.C.D. Dunlop and W.J. Sheehan, 1975, Taxation and the small firm in Australia, in: Taxation Review Committee, Commissioned Studies (Canberra, AGPS).
24.
Kelly, D. St L., 1992, Simplification: dingos revitalised, Taxation in Australia, 27, 5, November, 270–271.
25.
Liberal and National Parties, 1991 and 1992, “Fightback!”, Canberra.
26.
Lombard, M., 1991, Income distribution in Australia 1983–89, [Australian] Economic Papers, 10, 3, 52–63.
27.
Martin Report, 1991, House of Representatives Standing Committee on Finance and Public Administration, Follow the Yellow Brick Road, The Final Report on an Efficiency Audit of the Australian Taxation Office: International Profit Shifting (Canberra, AGPS).
28.
McCaffery, E.J., 1990, The Holy Grail of tax simplification, Wisconsin Law Review, 5, 1267–1322.
29.
McMahon, M.J. Jr., 1991, Reflections on the regulations process: ‘do the regulations have to be complex’ or ‘is hyperlexis the Manna of the tax bar’?, Tax Notes, 17 June, 51, 1441–1450.
30.
New Accountant, 1992, WST revamp just tinkering, accountancy bodies claim, 16 April, p.3.
31.
Pope, J., 1989, The compliance costs of personal income taxation: a review of the issues, Australian Tax Forum, 6, 2, 125–142.
32.
Pope, J., 1991, Book review of Administrative and Compliance Costs of Taxation by Cedric Sandford, Michael Godwin and Peter Hardwick, Australian Tax Forum, 8, 2, 251–257.
33.
Pope, J., 1992, The compliance costs of taxation in Australia: an economic and policy perspective, Working Paper No. 92.07, School of Economics and Finance, Curtin University of Technology, Perth.
34.
Pope, J. and D.L. Chen, 1993, Determinants of the time taken to deal with personal income-tax affairs in Australia, Discussion Paper (forthcoming), Department of Economics, University of Western Australia.
35.
Pope, J., R. Fayle and D.L. Chen, 1991, The Compliance Costs of Public Companies' Income Taxation in Australia, 1986/87 (Sydney, Australian Tax Research Foundation).
36.
Pope, J., R. Fayle and D.L. Chen, 1993, The Compliance Costs of Employment-Related Taxation (Sydney, Australian Tax Research Foundation, forthcoming).
37.
Pope, J., R. Fayle and M. Duncanson, 1990, The Compliance Costs of Personal Income Taxation in Australia, 1986/87 (Sydney, Australian Tax Research Foundation).
38.
Public Practice Committee, 1992, Fringe Benefits Tax Survey, Australian Society of Certified Public Accountants, Perth, Western Australia, February 1992.
39.
Sandford, C., 1985, Summing up, in: G.S. Cooper and R.J. Vann, eds, Decision Making in the Australian Tax System (Sydney, Australian Tax Research Foundation).
40.
Sandford, C.T. and J. Hasseldine, 1992, The Compliance Costs of Business Taxes in New Zealand (Wellington, Institute of Policy Studies, Victoria University of Wellington).
41.
Sandford, C., M. Godwin and P. Hardwick, 1989, Administrative and Compliance Costs of Taxation (Bath, Fiscal Publications).
42.
Slemrod, J., 1983, Optimal tax simplification: toward a framework for analysis, Proceedings of the 76th Annual Conference of the National Tax Association.
43.
Slemrod, J., 1985, The return to tax simplification: an econometric analysis, Working Paper No. 1756, National Bureau of Economic Research, Cambridge, MA.
44.
Slemrod, J., 1988, Complexity, compliance costs and tax evasion, in: Internal Revenue Service Conference Report, 1988, Change and Complexity as Barriers to Taxpayer Compliance, Washington D.C., IRS Document 7302, 6–89.
45.
Slemrod, J., 1990, Optimal taxation and optimal tax systems, Journal of Economic Perspectives, 4, 1, 157–178.
46.
Slemrod, J., 1992, Did the Tax Reform Act of 1986 simplify tax matters?, Journal of Economic Perspectives, 6, 1, 45–57.
47.
Slemrod, J. and N. Sorum, 1984, The compliance cost of the US individual income tax system, National Tax Journal, 37, 461–474.
48.
Speed, R., 1988, Taxpayer compliance and the taxation office, Taxation in Australia, 22, 10, May, 597–601.
49.
Steuerle, G.E., 1989, Keynote speech, in: Internal Revenue Service Conference Report, 1989, The Impact of the Tax Reform Act of 1986: Did it Improve Fairness and Simplicity?, Washington DC, IRS Document 7302, Rev., 3–90.
50.
Taxation in Australia, 1991, Current topic: simplification, 26, 5, November, 244–249.
51.
Taxation in Australia, 1992, National tax liaison group: recently issued and edited minutes of the meeting of 11 March 1992, 27, 2, August, 99–106.
52.
Taxation in Australia, 1992/93, Tax agents: many are just passengers, 27, 6, December, 317.
53.
Taxation Institute of Australia, 1991, A proposal for an Australian resident withholding tax, Sydney.
54.
Turnbull, I., 1992, Simplification: dingos revisited, Taxation in Australia, 27, 2, August, 79–87.
55.
Vaillancourt, F., 1989, The Administrative and Compliance Costs of the Personal Income Tax and Payroll Tax System in Canada, 1986 (Toronto, Canadian Tax Foundation).
