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Swan, Henry release tax paper -

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ELEANOR HALL: The Treasurer, Wayne Swan and the Treasury Secretary, Ken Henry have this morning
released a discussion paper on the Government's review of taxation in Australia.

It has been prepared by Treasury and shows the state of the current system and its complexity. Even
the Treasury says the exact number of taxes is difficult to determine. And the Treasurer is adamant
that he won't be passing judgement on what should be done before the review is complete.

Chief political correspondent, Lyndal Curtis reports.

LYNDAL CURTIS: The Treasurer has made the broad aims of the tax review clear.

WAYNE SWAN: The Government has three goals through this review: making our tax system more
internationally competitive; rewarding hard work, particularly untangling those disincentives which
do result from complex interactions between the tax system and the welfare system; and simplifying
the system as well - it has become very, very complex.

LYNDAL CURTIS: And he says the previous government dropped the ball on addressing the challenge of

WAYNE SWAN: The previous government had a rolled gold opportunity. When money was rolling in and
revenues were up, to reform the tax system; and they squibbed it.

LYNDAL CURTIS: The report says Australia's economic position provides the opportunity to reform the
tax system and to design a tax and transfer system that enhances incentive, rewards effort and
secures opportunity for the disadvantaged.

But the system at the moment is complex - that complexity includes the different taxes in different
states and particularly includes the tax and transfer system; the interaction between the tax
people pay and the money they get back from the government. And as Ken Henry notes, there's a price
to be paid for that complexity.

KEN HENRY: And then Section 11 devotes considerable space to a discussion of the complexity of the
system. It notes that this is a growing problem in both the tax and transfer systems. It points out
that we don't know what this complexity is costing in economic, social and environmental terms.
Though we can be sure that the cost is very substantial.

LYNDAL CURTIS: He says studying that impact needs further review.

KEN HENRY: In general I think it would be very helpful to have some quantification of the impact;
economic, social and environmental, of the complexity of the tax and transfer systems. I'm sure it

LYNDAL CURTIS: The report notes that government spending is the third lowest of OECD countries. The
tax to GDP ratio, the eighth lowest and the tax mix broadly comparable with most OECD countries.

As a percentage of GDP, tax revenue in Australia is significantly higher than most ASEAN countries
and the company tax rate well above the OECD average. But Mr Swan won't say the review will
necessarily mean a cut in the number of taxes.

WAYNE SWAN: The aim of the review is to make the system simpler and to make it more efficient. But
I'm not going to buy into the means by which we do that because that is what the review is about. I
mean Dr Henry may wish to comment on that but I'm not buying in or out about lesser or more.

I can tell you what our objective is on tax - to have it as low as possible, consistent with the
delivery of quality public services. I think we've seen at APEC in the last few days that it is
just extraordinary that as our region has exploded in growth, as we have become so much more part
of a global economy, our system of federalism has not followed.

We have to have a seamless national economy to compete internationally. That means cleaning up the
mess is COAG (Council of Australian Governments). That is why this review is closely linked to

LYNDAL CURTIS: Mr Swan says he's not in the business of ruling things in or out ahead of the review
committees report; but he has indicated it may not be possible to reform taxes without creating

WAYNE SWAN: Look there are swings and roundabouts in tax reform. Everybody knows that and you know,
it would be silly to say that there are not. But how we go about changing the system is what this
review is about.

LYNDAL CURTIS: The Treasurer has also rejected an assertion from his Coalition counterpart, Malcolm
Turnbull, that he has hastened Australia's economic slowdown by talking down the economy.

WAYNE SWAN: It is funny you know. Mr Turnbull and the Liberals seem to think that by ignoring
problems, you make them go away. That is their approach to the economy because, you see, there is
no factor, no factor which is more responsible for the slowing of economic growth in our economy
than the ten interest rate rises that occurred under the Liberal Party.

So Mr Turnbull is not in a position to point the finger at others when it comes to the slowing of

ELEANOR HALL: That is the Treasurer, Wayne Swan.