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Letter to the Editor, Australian Financial Review

Publication date: 28 Jul 98 | Source: THE TAX INSTITUTE

RE: The Status-Quo Isn't Good Enough

In two separate articles in last Friday's AFR (24 July 1998) the Commissioner of Taxation, Mr Michael Carmody, was quoted as in effect suggesting "there is no need for significant change, the ATO has got it all under control".

The Taxation Institute of Australia ("TIA") begs to differ. Matters addressed in these articles primarily call for direct action by the Government.

The first issue relates to submissions by the TIA and other organisations to the Government's Tax Reform Taskforce to establish an independent Board of Directors to oversee the ATO. We are strongly of the view that such an independent board, with ultimate responsibility in relation to ATO administration, human resources and internal budget matters etc, is in this day and age, essential if the operational efficiency of the ATO is to be improved. Importantly, under the TIA's proposal, the independent board would have no responsibility or authority to "second guess" the Commissioner in relation to all technical issues involving taxpayers and tax rulings etc.

The Commissioner's "its under control" response cites the existence both of consultative forums and the ATO employing external experts to form part of ATO technical panels as obviating the need for an independent board. The work of these forums and panels are important and they should continue to play a role. However, not only is the focus of these forums and panels the management of technical tax issues, but they all report to, or are controlled by, the Commissioner himself.

The TIA is talking about the "bigger picture": an independent board that focuses on management and the operational efficiency of the ATO, and reports to the Government, not the Commissioner.

In the other AFR article, the Commissioner is quoted as stating that he shares the frustrations of taxpayers in relation to tax complexity, but indicates that the ATO is moving to improve the quality of legislation by incorporating additional consultation into the early stages of policy development and legislative drafting.

The TIA's response is "enough is enough".

If the Commissioner has been concerned about legislative complexity, and believes that it is within his power to address these problems, why hasn't he been alleviating his "frustration" over the past five years of his term as Commissioner. It is during this period that there has been a compounding of the complexity in our tax laws and their administration.

The TIA see the addressing of "tax complexity" as an issue that the Government must take direct responsibility for. In so doing, the TIA has proposed that the Government form an independent Taxation Policy Review Board to report to it on minimising unnecessary tax complexity in relation to both our current system and any tax reform initiatives.

In short, the status-quo of "leaving it to the ATO" isn't good enough and the Government must take direct action in these areas.

Ken Spence President Taxation Institute of Australia.