Rob's+page+on+tax+reforms.

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**__What is a Tax Reform?__** //A Tax Reform is when the government of a country changes or alters the way they collect and/or manage the people's tax payments. The government is able to create new tax policies and abolish others. The government also has the power to alter the amount of income tax payed taking into account the amount of money each individual earns; they are also able to change the amount of tax that a business has to pay.//

**__How do Tax Reforms boost productivity at workplace level?__** A few examples as to how Tax Reforms boost productivity at workplace level are:

**//Tax Concessions//** Tax Concessions are usually found in the form of a rebate or allowance; they are able to help businesses reduce their tax liability. They do this because a business can claim inflated tax deductions for their investment and/or purchase in specific assets and/or activities. An exceptional and widely known example of a Tax Concession is the R&D Tax Concession. The R&D Tax Concession promotes and encourages businesses with the idea of investing in products, services and processes so that Australia can benefit from an increase in the it's international competitiveness and productive capacity. Some examples of recent Tax Concessions are:
 * Expanding access to the 175% R%D Tax Concession in 2008 accelerated innovation and boosted international competitiveness
 * In 2010-2011 the Government will provide a 50% tax discount on up to $1,000 interest, including interest earned on deposits, bonds, debentures and annuity products.

//**Tax Cuts**// Tax Cuts are sometimes referred to as 'Tax Concessions' as the businesses tax liability is cut in both methods. Tax cuts are more definite and seem to be more permanent as they don't just encourage the business to invest their money in specific assets and services; they encourage businesses to invest their money in __**ALL**__ types of assets and services.

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A type of tax cut that most people are aware of is " Lower income tax rates ". This basically means that there is a decrease in the amount of money that employees will have to pay out of their wage to the government; this will give employees an incentive to work harder, faster and longer. This increase in incentive will increase the units of goods and services produced in a space of time; this increases the productivity of the country and causes economic growth to increase.

**__How will the boost in productivity help contain inflationary pressures?__** Because there has been a boost in productivity, inflationary pressure will begin to become stagnant or even slow; this is because the boost in productivity shifts the Aggregate Supply (AS) curve to the left which increases supply without dramatically increasing demand. This ultimately reduces cost inflation and thus prices go down; because prices go down, the cost of production also decreases which means that firms and companies can ultimately produce more units of goods and services for less units of the AUD. Because it now costs less to produce goods and services, more competitors will enter the market which will increase competition; an increase in competition will also increase productivity.

**__Are there any negative consequences associated with the reform?__** A negative consequence associated with this reform is that because income taxes has decreased, this means that people have more discretionary income. Because people have more discretionary income they can buy more things and therefore, Aggregate Demand will increase. Aggregate Supply will soon slow as Aggregate Demand increases and meets it; Aggregate Demand will eventually pass Aggregate Supply and firms will not be able to provide consumers with the amount of goods and services that they are demanding, and thus Demand Inflation will increase and we will be back to square one, again.

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