Is Haig-Simons Still Relevant to Tax Reform in Australia?

2025 marks 50 years since Australia’s seminal Asprey review, the 1975 Taxation Review Committee. The Australian tax system was in poor shape and the Asprey report provided a blueprint for reform, seeking an application of the Haig-Simons comprehensive income model. Consistent with other tax reviews internationally, it recommended broadening of tax bases and lowering of tax rates. The Asprey report informed tax reform in Australia for the following 25 years.

The Haig-Simons approach, though, has limitations, necessitating modifications for practical application. Further, 21st Century tax reform thinking has been increasingly influenced by optimal tax theory, with a recognition of the limitations of a pure ‘broaden the base, lower the rates’ mantra. In the face of constraints, it may not always be optimal to tax uniformly. To what extent, then, is the pursuit of Haig-Simons-style comprehensiveness in tax design still relevant?