An Evaluation of whether the Australian regime of income tax on capital gains satisfies the macro-level policy objective of horizontal equity

The Australian income tax regime on capital gains (‘the CGT regime’) was enacted in 1986. The government which enacted the CGT regime so enacted it largely on the perception that the CGT regime will enable the macro-level policy objective of horizontal equity to be satisfied better. This paper reviews whether that perception is largely correct. Whether that perception is largely correct or not is germane for the following reason. In order to be able to enact the CGT regime, the government which enacted it had to necessarily ensure, or it is reasonable to infer that government may have had to necessarily ensure, that the CGT regime also satisfied a number of macro-level policy objectives other than horizontal equity. And those other macrolevel policy objectives are not necessarily wholly co-extensive with horizontal equity.