Reviewing Australia's Static Tax/Transfer Microsimulation Model

In 2010, the Secretary to the Treasury of the Government of Australia (Ken Henry) chaired a review of Australia’s Tax system (called the Henry Review). This review outlined a number of significant changes to Australia’s tax system, which could be implemented over a number of years, including reducing the corporate tax rate; and the introduction of a new mining tax. This review provides a long term strategy for Australia’s tax system, but also shows that Australia’s current static Tax/Transfer model (STINMOD) will need to be re-configured to be able to respond to future demands for policy modelling. As a start to this, NATSEM and the Commonwealth Government have instituted a full review of the STINMOD model, from a full code review through to fundamental questions about how the model will be able to respond to future policy requirements. This paper will highlight how the model was reviewed, what was considered in the review, and what the conclusions of the review were.