Exogenous tax changes are those not motivated by past or anticipated macroeconomic conditions. They are typically enacted for reasons unrelated to immediate economic circumstances and do not correlate predictably with factors likely to influence output in the near future.

They are further classified into three categories:

1. Long Run: These changes aim to enhance long-term economic growth. An example is the Tax Laws Amendment (Personal Income Tax Deduction) Act 2005, which targeted long-term economic expansion without addressing immediate economic conditions.

2. Ideological: These are motivated by philosophical or societal goals, such as the Excise Tariff Amendment (Tobacco) Bill 2016, which increased tobacco excise for public health objectives.

3. Tax Compliance: Focused on improving the fairness of the tax system, these amendments often target tax compliance by large entities. The Treasury Laws Amendment (GST Integrity) Bill 2017, aiming to enhance tax system transparency, is an example.

Decomposition of Exogenous Tax Changes from 1975 to 2018