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Australia Delays Tax Review

Friday, March 5, 2010

Having received the Henry tax review at the end of last year, and having then said that it would consider the review for release early in 2010, along with an initial response, the Australian government now appears to be delaying that release.

The government has previously said that the review would lay the foundations for a 10-year plan for reform. It was said that the governmentís response to the review's recommendations would be in various forms, with some things that could be done immediately or at least with a consultation and development process that could be launched.

Its release has been widely anticipated as it has caused uncertainty in some areas, particularly in the mineral resources sector where there has been speculation of an increase in mining taxation.

Even last month, the government had refused a request for a swift response, confirming that the government was still considering the detailed document having only received it a few weeks previously, but also confirming that it was preparing its initial response which would be published at some time early this year.

However, following the announcement of the governmentís far-reaching health and hospital reforms which will need discussion with all the parties involved, especially the state governments, the Prime Minister, Kevin Rudd, is reported as saying that he is now too involved and busy also to complete the details of the governmentís reaction to the tax review.

The government priority is, apparently, the health reforms and there is no target date for the release of the tax review. Various parties are still calling for its early release, to allay the speculation about its contents and about which of its recommendations will eventually be taken up by the government, but it appears that the Treasury is still working through the document. It will now be heavily involved in the switches in expenditure and taxation within the changes proposed to the structure of the health sector.