Where’s the complexity GST?

Rick Krever

• dead weight loss

• opportunity costs

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• Is the GST a less complex tax compared to others?

• Are some parts of the GST more complex than others?

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• Subjective or objective measurements?

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• what’s complexity?

• how can we measure it objectively?

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What is complexity?

• ABA NY Tax committee: follow the money -- it’s complex if you have to come to us

• complex certainty

• uncertain complexity

• CFC

• capital gain / ordinary income

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Complexity indicators

• private rulings

• ATOIDs

• public rulings

• appeals to courts

• appeals to higher courts

• outcomes of appeals

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• e.g.

• court: Yes

• court of appeal: 3 x Yes

• High Court: 3 x Yes, 4 x No

= 7 Yes, 4 No

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Challenge

Want to distinguish tax law from welfare law from penalty law

• what’s the benchmark law and what’s a concession?

- going-concern

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What to use as a benchmark?

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Number of Taxpayers / Revenue

Number of Taxpayers

Income Tax FBT GST

Tax Revenue

Income Tax FBT GST

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Intuition

• fringe benefits tax is least complex (bad drafting but clear principle-based design)

• GST is less complex than income tax but getting more complex (formerly principle-based design; abandoned in favour of no principles but “principle-based drafting”)

• tax expenditures are a cause of complexity

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Number of Taxpayers / Interpretative Decisions, 2001-2014

Number of Taxpayers

Income Tax FBT GST

Interpretative Decisions

Income Tax FBT GST

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Number of Taxpayers / Interpretative Decisions, 2006-2014

Number of Taxpayers

Income Tax FBT GST

Interpretative Decisions

Income Tax FBT GST

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Revenue / Interpretative Decisions, 2001-2014

Tax Revenue

Interpretative Decisions

Income Tax FBT GSTIncome Tax FBT GST

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Revenue / Interpretative Decisions, 2010-2014

Tax Revenue

Interpretative Decisions

Income Tax FBT GSTIncome Tax FBT GST

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Number of Taxpayers / Public Rulings, 2001-2014

Number of Taxpayers

Income Tax FBT GST

Public Rulings

Income Tax FBT GST

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Number of Taxpayers / Public Rulings, 2011-2014

Number of Taxpayers

Income Tax FBT GST

Public Rulings

Income Tax FBT GST

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Number of Taxpayers / Appeals of Assessments, 2001-2014

Number of Taxpayers

Income Tax FBT GST

Appeals of Assessments

Income Tax FBT GST

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Number of Taxpayers / Decisions Overturned on Subsequent Appeal,

2001-2014

Number of Taxpayers

Income Tax FBT GST

Decisions Overturned on Subsequent Appeal

Income Tax FBT GST

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Findings

• GST is complex

• Fringe benefits tax is really complex

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• tax expenditures based on external criteria are simple

• tax expenditures only in the tax law are really complex

• principle-based design eliminates most areas of complexity

• tax law based on judicial tests are complex

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GST Interpretative Decisions, 2001-14

0

50

100

150

200

250

300

350

400

450

500

Concessional Property Financial Services Other Structural Operational

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GST Concessional Decisions, 2001-14

0

50

100

150

200

250

2001-14

Health Food Other Concessional

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GST Categories of Health Concessions, 2001-14

0

10

20

30

40

50

60

70

2001-14

Services defined under medical legislationOther Health Services (incl. dental)Disability Goods/Services

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