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.