1. The main purpose of taxation is to raise revenue for the services and income supports the community needs. Public revenues should be adequate for that purpose.
2. Tax should, as far as possible, be levied equitably, according to ability to pay.
The level of income and assets available to an individual are the best measure of ability to pay, and there is a strong case on equity grounds for higher tax rates to apply to people with higher incomes (vertical equity).
Taxes should also, as far as possible be raised at the same level from people in similar circumstances, and people who obtain their income from dierent sources (horizontal equity).
3. Taxes should be equitable between dierent generations. As a general rule, people with the same ability to pay tax should pay the same amount of tax,
regardless of their age. The system should, as far as possible, be age-neutral.
4. Taxes should be raised in a way that minimises economic costs through tax-created distortions or bias.
This depends as much on how revenue is raised (especially consistency of taxation) as the overall level of taxes raised.
5. Taxes should be as simple, transparent and predictable as possible.
The system should be designed to minimise compliance costs and to discourage complex and economically wasteful avoidance strategies (for example, complex private trust and company structures).
6. The community as a whole should have a stake in tax reform.
As far as possible, the community, in all its diversity of interests and views, should be consulted and engaged in the tax reform process. Major reform will not be universally supported, but it is more likely to be accepted if the community is broadly involved in de␣ning the problems and searching for solutions and con␣icts of view are openly acknowledged and respected.