Both the Coalition and Labor are bottling it on tax reform
In an election campaign marked by both sides saying as little as possible about tax reform, yesterday’s National Press Club showdown continued the pattern of inertia.
Treasurer Wayne Swan and Opposition spokesman Joe Hockey talked about stimulus packages, waste and costings. They talked around tax reform. They mostly avoided talking directly about it.
Coalition leader Tony Abbott had already flagged that a Coalition Government would re-visit the Henry Review, with a view to announcing a plan within a year. That’s just a plan for a plan.
On the other hand, Labor’s promises haven’t gone beyond creating a Tax System Advisory Board to oversee corporate governance, and re-shaping the Board of Taxation.
Those are worthy commitments that, in their own small way, would improve the administration of the tax system, but they’re hardly visionary reform. Close examination suggests that Labor would be giving with one hand but taking away with the other.
In fact Labor has now rejected another five recommendations of the Henry Review - without anybody noticing.
The ‘Reshaping the Governance of Our Tax System’ policy document released last week says: “Taken together, today’s package of governance (is) a re-elected Gillard Government’s response to the ‘A responsive and accountable tax system’ section of the A Future Tax System [Henry] review.”
Crucially, it added: “Other recommendations in this section are not supported.”
Treasury head Dr Ken Henry made 138 recommendations when his report was publicly released in May. Twenty-nine were rejected out-of-hand by Treasurer Wayne Swan in his response.
The five latest recommendations to be ruled out all go to issues of transparency or accountability.
First down was Recommendation 111, where Dr Henry pushed for the establishment of “a more transparent means of dealing with community ideas about the tax system by extending the Tax Issues Entry System website and further developing its use”.
That’s a relatively inexpensive and easy thing to implement, you’d think, but it would not proceed under a re-elected Gillard Government.
You can say goodbye to Recommendation 114, which would have required the ATO to make public information or advice provided to it by Treasury to assist it in determining the purpose or object of the law, or materials used by the ATO to determine policy intent.
This had the potential to enhance transparency about policy objectives, but it now won’t see the light of day.
Recommendation 116 would have required the Government to better define the role of the Inspector-General of Taxation.
At the moment there is a risk of overlapping responsibilities between the Inspector-General and the Ombudsman. It seems this will still remain a grey area.
Recommendation 117 would have required the Government to give the Inspector-General of Taxation, the Australian National Audit Office and the Commonwealth Ombudsman “sufficient funding” to do their jobs in maintaining a fair and efficient tax system.
Admittedly there’s scope for interpretation in what constitutes “sufficient funding”, but the intent was clear – Ken Henry was going into bat for taxpayers.
Lastly, Labor ruled out Recommendation 118, which would have allowed the Joint Committee of Public Accounts and Audit to examine reports of the Inspector-General of Taxation and the Commonwealth Ombudsman.
That would have extended to monitoring the ATO’s implementation of the recommendations in those reports. Alas, it seems this was a bridge too far.
Amazingly, all this seems to have passed without the Coalition noticing. None of this rated a mention in the debate.
Weeks before the election was called, the Taxation Institute tried to convince the major parties to commit to a genuine public debate on taxation issues – they are yet to formally respond.
While the media subjected both sides to scrutiny on broader economic questions yesterday, we’d welcome a second debate so that tax professionals can put their own specific questions.
What’s most telling about the level of debate is that neither side of politics has enough commitment for the challenge of tax reform to risk ruling anything in.
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