Reconsidering the Case for Tax Reform during a Crisis
The impact of COVID-19 on fiscal systems worldwide is exactly the type of crisis thought necessary to precipitate major tax reform. This article contends that if Australia is about to embark on significant tax reform, then this must be accompanied by a full and frank account of the respective benefits and risks of reform. It uses the debate on Goods and Services Tax (‘GST’) reform to reveal the flaws inherent in existing reform discussions that fail to progress beyond the economic merits of a policy idea without sufficient regard to how those ideas are implemented (or not) in practice. The GST reform debate generally proceeds with supporters of GST reform arguing for the expansion of the tax on the grounds of economic efficiency and opponents of reform arguing against the expansion of the tax on the basis of unfairness. However, when the discussion moves beyond economic theory and takes account of how the GST operates in practice, and specifically the laws and legal institutions that implement the GST, many of the purported benefits of the GST do not hold up. This has important consequences for the types of reform proposals put forward as well as how those proposals are assessed.