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II. Committee's Approach

1.11. In presenting its findings, the Committee could adopt one of two approaches. Either it could go through the provisions of the legislation as it now stands, stating its immediate and long-term proposals about the revision of each Act, explaining in some detail its suggestions for additional legislation, and letting the broad picture of the implications of the whole set of reforms emerge gradually; or it could first settle the broad outline of the kind of tax system it would like to see established eventually and work back from that to the changes in the present system that would have to be made before that long-term aim could be realised.

1.12. The second approach has been adopted as the Committee believes that this will prove the more useful procedure. There are some detailed areas of tax legislation that the Committee has not fully explored. It is also, of course, uninformed of many of the short-term pressures and constraints under which the Australian Government must labour, as all governments must always labour. If it advanced precise proposals for immediate adoption, and especially if it gave them exact numerical content, many would be likely to turn out, in the event, to be untimely. In matters of taxation, committees of inquiry are ill-advised to offer neat time-tables and precise rates or quantities. Moreover, and above all, when a tax system becomes somewhat ossified and somewhat incoherent as has the Australian, and when rather sweeping reforms are under consideration, much public discussion and understanding are essential before large changes can be attempted. Structural reforms will inevitably take some years to implement, rate changes have to be made gradually as the circumstances of the day permit, and transitional problems of much intricacy have to be solved at every point. A proper appreciation of the ultimate aims of what is being proposed requires a presentation that in the first place is in terms of general principles rather than legal or quantitative detail. Strategy comes before tactics.

1.13. Hence in this report the Committee will reach its conclusions by first discussing the long-term aims of tax reform of a general but not, it is hoped, unduly abstract kind. This will occupy Chapters 3–5, after a brief descriptive survey in the next chapter. Chapter 3 will examine the competing criteria of merit for individual taxes and tax systems; Chapter 4 will describe and debate the issues surrounding the central problem of the right progressivity of the tax system as a whole; Chapter 5 will outline the prime options of direction for long-term reform from which, in the Committee's view, a choice needs to be made, and state the Committee's own preference. Inflation has major implications both for long-term reform and for immediate tax revision, and these will be identified and discussed in Chapter 6. Then a succession of chapters will examine existing and possible taxes with respect to some changes that should be made as soon as possible, to others that would have to be effected gradually if the Committee's recommended strategy were to prove acceptable. In the final chapter, a brief restatement of the matters covered in the earlier chapters is presented.

1.14. By its terms of reference the Committee's attention is confined to the taxes imposed by the Australian Government and it has not therefore closely examined the taxes levied by other authorities in this country. It has, however, taken these taxes into account when viewing the tax system as a whole and will need at a number of points to mention particular areas where the several tax systems crucially impinge on one another.




  ― 4 ―

1.15. One further point. In a review that touches on basic issues about what society wants and does not want its taxation system to do, the Committee must be deliberately tentative in those of its recommendations whose merit turns upon social and political judgments about which there can never be one right answer. It should not pretend to replace the political process or suggest the exact compromises that may have to be made. At the same time it should hope to clarify the factual basis upon which these value judgments ought to be founded, and to draw attention to gaps in the information when these are particularly important.

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