Few economic changes elicit the level of debate associated with the introduction of a new tax. The Coalition's proposal to introduce a GST in Australia on 1 July 2000 is certainly no exception. It is widely accepted that tax reform is vitally necessary to overcome the deficiencies in the current taxation system, however the structure of such reform measures has been widely debated.
The purpose of this paper is to critically analyse the Coalition's tax reform package, in conjunction with value added taxes operating in foreign countries, to determine if the Coalition's proposal is ideal for Australia. The concept of "ideal" is evaluated against the universally accepted axioms of a good tax system namely, simplicity, neutrality, vertical and horizontal equity. The impact of the ideal tax system on various Australian taxpayers is then analysed. Results of the analysis indicate that the Coalition's tax reform proposal, inclusive of a GST, does satisfy the criteria of an ideal tax system. Despite some taxpayers suffering detrimental effects under the new tax system, the compensation measures adopted by the Coalition adequately provide for those who are most adversely affected. Overall the GST and associated reforms enable Australians to prosper and is an improvement on the taxation system currently operating in Australia.