The Simple Life

Posted on March 15, 2006 by andrewleigh

Peter Martin (the holiday Gittins) has an article in today’s SMH arguing for simplifying our tax filing system. And I’m not just saying that because I get a footnote.

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1 Response to The Simple Life

  1. Peter Whiteford says:
    March 15, 2006 at 7:01 pm

    It would be necessary to reform the family payments system first, or else most families with children – a sizeable group – would still have to put in tax returns. This is because for the purposes of the FTB income test families estimate their income in advance, and this gets reconciled through the tax returns at the end of the financial year. In the past this has lead to considerable overpayments, because families tend to underestimate their future incomes and it appears that family incomes are actually quite volatile. In more recent years, the number of overpayment has fallen, but it is still quite significant. The alternative would be to move the payments and their reconciliation back into the benefit system, as they were before ANTS, or to move to a Canadian-style system where tax credits are set on the basis of previous years financial income and remain basically unchanged during the financial year, and are then set for the next year on the basis of the current years income. It would also be possible to make the system universal, so that reconciliation was unnecessary, but this would be extremely expensive, if one wanted to avoid losers.

    There is a discussion of some of this at http://www.jrf.org.uk/knowledge/findings/socialpolicy/pdf/543.pdf

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