Tax reform is in the news daily. Calls for fundamental reform have become louder, but there are diverse views on the direction and scope of the reform that is needed. The Liberal/National Coalition Government has committed to a White Paper process on Tax Reform, which the Government has indicated will commence with the release of a discussion paper designed to prompt a national conversation about tax reform. The Government has also commenced a White &nbsp;Paper process for reform of the federation (DPMC 2014; 2015), which is examining the distribution &nbsp;of responsibilities &nbsp;between State and Commonwealth governments, with implications for federal financial relations, including taxation.

But what is tax reform? What needs fixing in Australia\u27s tax system, why, and what can and should be done? Hotly debated issues range from whether to broaden the base or increase the rate of the Goods and Services Tax (GST), to how we can properly tax multinational corporations. &nbsp;There is debate about whether &nbsp;superannuation &nbsp;tax concessions are fair; the impact of tax on housing; and many other issues ranging from the complexity of tax rules for small business to the volatility of stamp duty revenues.

Five years ago, the Henry Review (Report on Australia\u27s Future Tax System, Henry 2010a) made a detailed examination of Australia\u27s tax and transfer system. To place the myriad of tax issues, proposals and debates in context, this TIPI report provides a stocktake of the tax system five years after the Henry Review. Tax reform is fundamentally political. Rather than recommending specific reforms, we aim to identify key principles and directions for tax reform and to show what we know, and where the gaps are in our knowledge of tax policy.

This TIPI report:

&gt; reviews the economic and social challenges which the Henry Review identified and identifies new ones which have come to the fore in the last five years;

&gt; provides an overview of the tax and transfer system and changes since the Henry Review, including comparisons with selected countries;

&gt; identifies principles for analysis and discusses some of the broad choices and trade-offs that will need to be considered in any reform;

&gt; assesses the extent to which the Henry Review continues to provide a basis for considering the direction of tax and transfer system reform; and

&gt; &nbsp;identifies areas that warrant further consideration and research.

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