Making the Australian Tax Expenditures Statement an Effective Policy Instrument : From Fiscal Record to Transparent Report

Tax expenditures reporting has attracted a good deal of attention following upon the seminal work of Stanley Surrey, who developed the tax expenditures statement (“TES”) as a fiscal management tool. Although Australia has adopted some form of tax expenditures reporting for some time, the nature and efficacy of the Australian tax expenditures statement has attracted little critical attention. This article argues that a TES which meets Surrey's fiscal management imperative by merely identifying tax expenditures and quantifying their extent, fails to provide the information necessary for a transparent tax expenditure analysis. This article therefore argues that the TES should be reconceived in terms of an annual critical appraisal of the operation of the tax system. Whilst retaining the benefits of tax expenditures reporting as originally conceived by Surrey, this approach to tax expenditures reporting would enhance fiscal transparency in the sense of promoting participatory democracy and, hopefully, promote taxation legislation with stronger and clearly stated policy foundations