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Hockey signals watchdog on tax office

Shadow Treasurer Joe Hockey has launched a fierce attack on the Australian Taxation Office, accusing it of having had “an…

Joe Hockey has “deep reservations” about the current role of the tax office. AAP/Alan Porritt

Shadow Treasurer Joe Hockey has launched a fierce attack on the Australian Taxation Office, accusing it of having had “an insular and inward looking culture” for too long and raising the spectre of possibly breaking it up.

Hockey, delivering his post-budget address to the National Press Club, said a Coalition government would immediately set up a parliamentary committee to oversee tax administration.

The Oversight Committee’s first task would be to set dates for regular semi-annual public hearings with the Commissioner of Taxation. These would be similar to the public hearings that grill the Reserve Bank Governor.

The committee’s second task would be an inquiry into the most effective organisational structure for independently handling and resolving formal taxation disputes.

Hockey repeated his earlier-expressed “deep reservations about the ATO being both an administrator and prosecutor”.

He recognised the new Commissioner of Taxation, Chris Jordan, was endeavouring to put in place a more independent process for resolving disputes, and said there should be a proper evaluation of this approach.

“However, if the Oversight Committee believes it’s necessary, then the Coalition stands ready to break up the Tax Office, so that its policeman functions are separate to its responsibility for administering the tax system.”

One measure that would help change the Tax Office culture was to appoint people with business experience to senior posts – and Jordan (from the private sector) was “a breath of fresh air” in this regard.

“But for too long the tax office has developed an insular and inward looking culture that has put it at odds with taxpayers, particularly in relation to its overly aggressive interpretations of tax laws.

“Taxpayers are not the enemy. They should be respected,” Hockey said.

A Coalition government would expand the number of second commissioners of taxation. and reduce the complexity and increase the certainty of tax law.

“When dealing with taxpayers, the ATO has everything in its favour,” Hockey said.

This year alone, the government had increased the size of the Tax Office by more than 500 employees to more than 22,000 staff in total. The legislated powers all worked in favour of the Tax Office as well.

“For example, if a taxpayer is assessed for tax, the only way the amount can be disputed is if the tax is paid in full, with few exceptions. And when there is a dispute over an audit the ATO can often seem to go through the motions rather than objectively reconsidering the taxpayers position.”

Asked whether he believed tax evasion was no longer a significant problem, Mr Hockey said that everybody who had a liability should pay their tax and the Tax Office “has done a damn fine job in many areas”.

“There is no argument from us about giving them appropriate additional resources for appropriate operations to crack down on unlawful activity,” he said. Mr Hockey said it was where “taxpayers feel that they are just constantly under siege from the tax office” that there was a problem.

He said it was still the case that when people went home at night they could not ring the tax office, because there was no one to answer the phone. “That’s when small business has to pay their tax, not when their trying to make the widgets during the course of the day.”

Under questioning, Hockey declined to rule out changes to the non-means tested child care rebate, but stressed that child care was “hugely important for productivity growth because it helps participation and that is one of the areas that you would be most reluctant to change.

“Child care support is essential to try to help families that have no choice but to have two working parents.”

Asked whether Treasury Secretary Martin Parkinson’s days would be numbered if there was a Coalition government, Mr Hockey said “no”.

There has been periodic speculation about Parkinson’s future, with suggestions that some in the Coalition believe he should be removed because they see him as too associated with the Labor government. But Hockey appears to favour stability and Coalition sources say that at least in the short term it would be difficult to find a replacement who would be appropriate for the Treasury job.

Hockey reiterated his “deep reservations” about the numbers in the budget.

“My faith in the numbers is not there,” he said. “And it’s illustrated by the fact that the government’s numbers have been so wrong not just once or twice but on many occasions”.

Parkinson on Monday defended the budget numbers, saying that if Treasury and Finance had been issuing their pre-election financial statement now the numbers would have been the same as those contained in the budget.

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31 Comments sorted by

  1. Peter Evans

    Retired

    Didn't see the whole Press Club speech but loved the question by Malcolm Farr highlighting how proposed ministry is by far biggest in history. The question was along the lines of "Is the Coalition standing by cuts to the public service while putting in place a bloated ministry". Hockey left it for Mr Abbott. On the topic of the article also loved the comment that small business people have no one to ring at Tax as they have to do it in the evening. So are we to get a bigger tax office that will be more expensive to run to staff phones at night with people who can do more than say "We'll get back to you". What about the small business owner sending off an email to be dealt with in office hours?

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    1. Chris Reynolds

      Education Consultant

      In reply to Peter Evans

      Yes. The thing about Jo is that he is not that smart. Penny Wong could run rings around him before breakfast and still have enough puff to go a few rounds with the smarter but less sexy member for Goldstein. His performance on the national Press Club was typical. Full of bluster and overkill.

      My feeling about the Abbott team at the moment is let them have their head.

      Pyne will continue to tell the outrageous porkies he seems to specialise in currently and Abbott cannot get the cat got the cream grim off the face. What a motley crew!

      Sadly, as the cartoon tag once said," Chaps, this is serious!". This lot will do enormous damage if they are let loose in Government.

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    2. Tony Grant

      Student

      In reply to Peter Evans

      Peter,

      I watched and Hockey is certainly not the man for the job.

      He struggled in a friendly environment...wall to wall paid servants of "they who must be obeyed"?

      He perspired and hands were all over his face and head...and the "you know what I mean with nearly all statements...just bad government? It reminded me of the character in the movie "The Castle" the local lawyer in the High Court...it's the vibe!

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    3. Rex Gibbs

      Engineer/Director

      In reply to Peter Evans

      Still waiting for reply to my email of 4 February and followup emails of 26 feb and 4march about NZ/Aus GST as exporter. Got told seek private ruling on Construction cost reporting when 70% of this year's Construction costs were off shore but if I don't report the guy who supplied the toilet paper in NZ I am liable to penalty. Every time the tax office refers to me as a client cold fear grips me.

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    4. Peter Evans

      Retired

      In reply to Rex Gibbs

      My comment wasn't in defence of the Tax Office. Delays such as yours are unacceptable and whoever manages that area should be ensuring they don't happen. A delayed decision is worse than no decision in many cases. My comments went to whether the solutions proposed by Hockey would help. Would an out of hours phone call help fix the many delays that occur in the Tax Office? I suspect not.

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  2. Leonard Stall

    Analyst

    i also heard hockey say the coalitions nbn will remain off budget, representing a hypocritical backflip from prior criticism from both him and turnbull. so we'll never actually know how much it costs (including, i assume, the costs of maintenance of the copper), only that it will be far inferior to labor's nbn.

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    1. ian cheong

      logged in via email @acm.org

      In reply to Leonard Stall

      I thought the copper maintenance cost was part of the 12billion given to telstra for the worthless copper network. So if it is efficient to replace copper with fibre, then some of that 12billion will build fibre connections where the copper is no longer efficiently repairable.

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    2. Jack Arnold

      Director

      In reply to ian cheong

      Now Ian, copper has scrap value. Indeed, our rural exchange (circa 1975) suffered a regular outage and a large section of copper wire was replaced with ... copper wire!!

      The future with the Coalition appears to be the 19th century.

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  3. Anthony Foy

    Copywriter

    “Taxpayers are not the enemy. They should be respected,” Hockey said.

    Hmm, except the well-off do everything they can to 'minimise' the tax they pay. (Sounds so benign, minimise, doesn't it?) It is only the 'minimisation' that leads to disputes, so why shouldn't the tax office be allowed to do whatever it can to ensure it collects the 'right' amount of tax.

    Sounds to me like another thinly veiled attempt for the LNP to look after its core constituency, while the average Australian pays disproportionately for it.

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  4. Ian Alexander

    Reader

    More dog whistling by the coalition.

    Attacking the ATO for correctly chasing dodgy operators is simply an appeal to their millionaire mates - in short it means, do what you want guys, we'll muzzle the tax office.

    The attack on the Treasury is similar. Either the Treasury department is lying or Hockey is. I know who I'd put my money on.

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  5. John Armour

    logged in via email @bigpond.com

    "Under questioning, Hockey declined to rule out changes to the non-means tested child care rebate, but stressed that child care was “hugely important for productivity growth because it helps participation and that is one of the areas that you would be most reluctant to change."

    Participation has nothing to do with Productivity.

    I'd like a dollar for every time Hockey (future Treasurer for chrisake !) has got this wrong.

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  6. John C Smith

    Auditor

    Hope Hokey or someone else fix the ATO. Since Hawk-Keat time ATO became a law to itself. From a culture of caring to a culture of envy, bullying, egoism, high handedness to overbearing. The internal structure of top heay to bottom nothing.
    In 1980 there were only a handful of SES. I just heard there are more than 450 of Senior Executive Sservice officers in the ATO compared to less tha 100 of lowerst level officers. Each SES have at least three officer to srvice them.So one SES cost almost two million dollars a year to maintain. This could be the same throuhout the Public service. You wonder where the tax money goes.

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  7. John C Smith

    Auditor

    Appointing more second commissioners or more outsiders not going to help. What we need is an efficient workforce in the ATO. The so called complex are what adults call complex what kids call a mess. The Tax mess has to besorted out. It cannot be done by appointing more second commissioners.
    The whole public service had to be overhauled including the State and Local.

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    1. Ronald Ostrowski

      logged in via Facebook

      In reply to John C Smith

      John, I gotta agree with you there. This propensity to reduce bread and butter staff and maintain, if not increase, the SES levels has been a trend for decades. I understand that only now the Government has announced cuts to the upper echelons. But as always the proof is in the pudding.

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  8. Jim KABLE

    teacher

    Whenever Joe H opens his mouth it is of two varieties: whining or hyperbolic bluster. Certainly not to be listened to as reasonable. When Tony ABBOTT goes down in September he will have taken with him Hockey and Pyne and Hunt and others he has influenced into rude negativity and fear tactics!

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  9. Ronald Ostrowski

    logged in via Facebook

    So Hockey has concerns about the ATO being both regulator and prosecutor? Does he have similar concerns with other Commonwealth agencies having the same role? I am thinking of Customs and the Civil Aviation Safety Authority as some examples. Will he also split these and then impose extra staff required for the corporate support activities, whilst at the same time reducing the public service by 12,000? Has he undertaken any prior workforce planning? I leave you all to ponder and find the answers. Sorry, I only have questions.

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  10. Jack Arnold

    Director

    "Mr Hockey said that everybody who had a liability should pay their tax"

    Really??? So, do the Coalition tax plans include plugging the tax loop-holes that allow corporations to pass debt to Australian subsidiaries, international transfer pricing to generate profits overseas and accelerated depreciation for the greedy mining magnates?

    Oh, THOSE are the reforms that will be protected so that only foreigners benefit from Australia's mineral wealth!!

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    1. John C Smith

      Auditor

      In reply to Jack Arnold

      Pluggingb the loop holes; Labour has produced thousands and thousnads of tax literature to plug the holes but had lead to more and more loops.

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    2. John C Smith

      Auditor

      In reply to Jack Arnold

      MRRT no depreciation at all, just write offf all capital; old, now and future. Written on paper covering labour faces and wrtten by big shovels.

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  11. Gregory P Lehman

    logged in via Facebook

    Ha - putting business people in charge of the Tas Office is like putting alcoholics in charge of the brewery! Everyone knows that business is all about minimising tax and finding loopholes to 'get away with what you can'. Yet the very same people will be the first to criticise government for 'mismanagement' when they do not have enough to fund public infrastructure and services that they consider to be their right as taxpayers.

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  12. Peter Ormonde

    Farmer

    Lots of soft targets... but we're all going to be fine though out here in voterland. Christmas every single day. Baby bonusses and paid parental leave for everyone!

    12,000 public sector jobs... a brake on the tax office... rubbery figures from an implicitly politicised Treasury ... but nothing about spending cuts and balancing the budget as promised.

    This is what you call getting a rails run from the Press Gallery folks.

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  13. Edward Cannella
    Edward Cannella is a Friend of The Conversation.

    Zoologist

    These institutions are an easy target for politicians. It is means of adding to the flock of scapegoats the coalition will use to distract the cattle on the other side of the fence. These sort of nonsense dialogues help keep the focus away from the fact, in this case, that we have a coalition with no policies sans a few generalised statements about what they may possibly do, maybe at some time, or maybe not. But given that we have a fraternity of journalists so shallow in their intellectual capacity…

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    1. Craig Somerton

      IT Professional

      In reply to Edward Cannella

      Another example of the standard LNP/IPA mantra: Public = Bad, Private = Good.

      What Joe is secretly trying to say is:

      Those unelected public servants won't exactly do what we tell them to do, so we need to demonise them as inept and self-important fat cats acting as judge, jury and executioner, preying mercilessly upon the clever innovators and job creators. And once we have stated the mantra a thousand times over and public opinion has been twisted, we will more easily be able to rid ourselves of these worrisome recalcitrants.

      Clearly the private sector is much more efficient at conducting business, why don't we simply outsource the entire taxation regime?

      Oh, and by the way, I happen to have some eminently qualified mates who would happily take over these arduous functions, for a modest fee, of course.

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  14. Geoff Taylor

    Consultant

    We have a tax ombudsman.
    Out of the mass marketed debacle ten years ago we got an inspector general of taxation, we got guidelines for the operation of the PtIVA Panel, we got partial safe harbour for those who relied on a qualified tax adviser, we got access to private ruling summaries.
    What more does Mr Hockey want?
    As to reduction in volume of tax law, including PRs, PBRs, ATOIDs etc, it has been promised many times but I don't see it happening any time soon.

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  15. Greg Young

    logged in via Facebook

    Michelle, are you at any stage going to intellectually critique the Opposition, or any of their policies, or do you simply plan to parrot what is said in Canberra each day? I honestly cannot see the difference between what you write here as a supposed academic, and what you churned out on a daily basis as a Fairfax journalist.

    If you had no plans to change anything about what you do, why bother changing employer or title?

    What are you bringing to The Conversation as a Professorial Fellow, as opposed to just another Press Gallery reporter? What is the difference? I'd really like to know.

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  16. Hardy Gosch
    Hardy Gosch is a Friend of The Conversation.

    Mr.

    Thought provoking articles on IA and NM!
    This is usually the strength of TC. What is going on, I wonder!!

    Joe Hockey’s press club address yesterday included at least 20 fudges and furphies — all of them, again, ignored by Australia’s press pack. Alan Austin covers 15 of his most egregious errors.

    http://www.independentaustralia.net/2013/politics/sloppy-joe-hockeys-fifteen-biggest-press-club-furphies/
    Also:
    http://www.independentaustralia.net/2013/politics/conservative-capitalism-a-strange-way-to-remain-the-same/

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    1. Peter Ormonde

      Farmer

      In reply to Hardy Gosch

      You mean that it could actuallyt see a beefed up enforcement arm of the ATO - you bet. There are good reasons to separate compliance from administration, not the least being a greater enthusiasm for prosecuting evasion rather than settling up in generous back-room deals as currently occurs.

      But I'm pretty sure that's not quite what Joe and Tony would have in mind.

      Perhaps we could re-allocate some of the enthusiastic Federal coppers who are pursuing "people smugglers" - they seem a very blood-hungry pack of hounds indeed.

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  17. Greg Byrne

    logged in via Facebook

    Hockey says that

    “Child care support is essential to try to help families that have no choice but to have two working parents.”

    There is another possibility and that is to structure the economy to suit single income families. We had that in the 1950s with much lower technology. The need for two pay packets comes from incompetent governments and it looks as if an Abbott Government would not be much better than its predecessors. Think outside the box Mr Hockey and maybe your government will have a reasonable lifetime and do something positive for the community.

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  18. Lee Emmett

    Guest House Manager

    When you add up all moves by the LNP and their mates, it starts looking a bit scary: Joe Hockey hitting out at the ATO, the Victorian right wanting to privatise the ABC and SBS, Tony Abbott wishing government worked more like business (and cutting programs to work towards surpluses), Gina Rinehart's and Clive Palmer's wanting more political and media influence, and the IPA having a shot at ASIC, Peter Reith's articles supporting Work Choices reforms etc. These are all part of a combined neo-conservative strategy to preserve or favour a 'status quo' where the gap between 'haves' and have nots' would increase if the LNP came to power federally.

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  19. John Campbell

    farmer

    And this from the party that made all small business owners unpaid tax collectors for the government.

    I know of many a small business that would love to have that burden removed.

    No doubt big business is worried that the government may have their tax avoidance methods in their sights.and getting in early with their mates.

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