6 April 2000

Mr. Dick Warburton, today released his report to the Treasurer on the tax value approach to income tax. Mr Warburton was invited by the Treasurer, in November last year, to Chair a consultative process to assess the practicalities of the tax value method and its implementation.

Mr. Warburton said, ¡§I have recommended the Government proceed with the tax value approach to income tax law and that it also moves post haste, to put in place the key administrative reforms recommended by the Ralph Review of Business Taxation.

The benefits of the tax value method are substantial. Put simply, it is a proposal to build the tax law on a set of coherent and clearly stated principles - the objective is to create tax law that makes sense. By linking the provisions of the law explicitly to underlying principles, we will reduce the scope for confusion and misinterpretation.

In making my recommendation I am mindful of the undoubted pressures on the business community as a result of the wide range of other changes to taxation arrangements.

Two factors led me to the view that we should press on and adopt the tax value method.

Most importantly, the Government has already committed to introduce major changes to the business tax system ¡V these changes will have to be implemented whether the Tax Value Method proceeds or not. Second, there is scope for a well-considered phasing over time and the new measures will not begin to be introduced at all for well over twelve months from now.

Based on my consultations I am also convinced that the alternative, that is to keep the current system, is unacceptable. Australian businesspeople in general, our tax accountants and lawyers have been struggling for generations with faulty and encrusted tax law, combined with poor administrative procedures.

Fixing our administrative procedures is an essential part of achieving modern, sensible, transparent and effective ways of developing the new tax law. I have recommended therefore that the Government¡¦s decision to proceed with the Tax Value Method be linked explicitly toa commitment to the following:

• The Government delivering legislation that gives effect to the high level principles,

• A clear timetable of phased implementation

• Investment in education and training to make implementation more manageable,

• A commitment by the Government to the integrated design process recommended by the Review of Business Taxation which would systematise business input into the development of tax legislation and its implementation.

•  An effective Board of Taxation with a coordinating role over the consultation with business and with the other functions recommended by the Ralph Review.

These reforms are fully endorsed by the Australian business community they are frankly long overdue. Since the release of the Ralph Report, their full adoption has been an explicit part of the support the business community has given to the Government¡¦s business tax reform plans.

MEDIA INQUIRIES

Dick Warburton, 0411 254 793, Mark Paterson, 0419 215 037