The wide ranging review will encompass many aspects of the federal and state/territorial tax system, and will consider: the balance of taxes on work, investment and consumption and the role for environmental taxes; enhancements to the tax and transfer system facing individuals, families and retirees; the taxation of savings, assets and investments, including the role and structure of company taxation; the taxation of consumption and property and other state taxes; simplification of the tax system, including the interactions between federal, state and local government taxes; and the proposed emission trading system.

The review will not, however, consider the rate and base of the GST, and interactions with the transfer system.

The government intends to launch a consultation with the public on the proposed changes, and the Review Panel will provide its final report to the Treasurer by the end of 2009.

"Long-term reform of our tax and welfare systems is a key way to secure our economic foundations for the future, create wealth, spread opportunity and reward working Australians," announced a statement issued by Treasurer Wayne Swan on Wednesday.

The statement went on to explain that:

"The AFTS Review will play a vital role in modernising Australia’s economy to meet the great economic, social and environmental challenges of the 21st century. Meeting these future challenges - like climate change, the ageing population, new technologies and rapid globalisation – will require a tax system that is as fair and efficient as possible and the AFTS Review will help achieve that goal.