The tax priority in Australian corporate insolvency: A Dworkinian approach

In 1988, the Australian General Insolvency Inquiry (Harmer Report) recommended that the principle of pari passu should be maintained as a fundamental policy objective underpinning Australian insolvency laws. On this basis, it was recommended that the preferential treatment for Australian taxation debts be abolished. In the 30 years following the Harmer Report, Australian taxation and insolvency legislation is increasingly complex and inconsistent. As the Australian government grapples with the responding to the economic impact of COVID-19, the issue of whether taxation should be given preferential treatment in corporate insolvency will inevitably arise. This paper argues Dworkin’s rights thesis and equality theories provide a framework for determining whether any departure from pari passu can be justified in the context of Australian taxation and corporate insolvency law