'The Gatekeeper Court: For the Revenue or for the Taxpayer?' (University of Melbourne Legal Studies Research Paper No. 828, 2019) By Rachel Davies and Miranda Stewart
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Since its establishment, the Federal Court of Australia (“the Court”) has become the leading tax court in the nation. The Federal Court is the final port of call for most taxpayers and for the Federal Commissioner of Taxation. In the spirit of inquiry into the nature of “income” for tax purposes, this paper does both a “wide survey and an exact scrutiny” of aspects of the Court’s record in taxation matters over the last 40 years. The paper presents statistics about tax cases in the Court since its establishment in 1977 and discusses trends. We then turn to discuss important themes in tax cases before the Court, including the boundaries of ordinary income and allowable deductions; the complexity of the tax statute and of the task of statutory interpretation; and the approach of the Court to tax avoidance. Finally, the paper considers some features of tax litigation in the Court and challenges for the future.
'Taxation of Automation and Artificial Intelligence as a Tool of Labour Policy' (SMU Centre for AI and Data Governance Research Paper No. 2019/01) by Vincent Ooi and Glendon Goh
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Rapid developments in automation technology pose a risk of mass displacement of human labour, resulting in the need to support and retrain displaced workers (a negative externality). We propose an “automation tax” that would slow the adoption of automation technology in appropriate circumstances, giving workers and social support systems time to adapt. This could be easily implemented through changes to the existing schedular system of depreciation/ capital allowances, reducing the uncertainty of its application and implementation costs. Such a system would be flexible enough to keep up with rapid technological developments. Two main dimensions may be adjusted to produce intended distortionary effects: 1) accelerated depreciation, and 2) bonus depreciation. While the benefits of efficiency gains mean that the automation tax is unlikely to have widespread application, it does provide a useful tool for specific situations where the rate of automation needs to be slowed due to its resultant social costs.
'Navigating the 4th Industrial Revolution:
Taxing automation for fiscal sustainability' by Bronwyn McCredie, Kerrie Sadiq and
Ellie Chapple
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The 4th industrial revolution has arrived. But this industrial revolution is unlike those witnessed
in the past that saw advancements through manufacturing and trade accompanied by higher
standards of living for many. Equal opportunity and growth have been replaced by the 21st
century trend of rising inequality, in which advancement through digitisation and automation
brings fortune to the few and threatens to leave the rest behind (Weyer, 2016). As a result,
current tax systems are under pressure with displaced workers requiring support, and the fiscal
purse, which has historically been funded by income taxes, being eroded due to a decreasing
number of workers to tax. Conceivably, it is up to Governments to address this ‘double negative
effect’, but how and from what theoretical basis does it do so?
This paper presents a theoretical basis and three alternate models for taxing automation: a
pigouvian tax; a tax on economic rents and an appreciation tax. Each of these models is
evaluated alongside a discussion on the shift in global tax policy from taxing income to taxing
capital. This paper argues that this shift is necessary to reduce inequality and to ensure even
the lowest common denominator is provided for, for we are the 99%.
