The key Parliamentary Committee overseeing the Australian Taxation Office this week released a report calling for major reforms to the way the ATO treats taxpayers. At the core of the report is the recommendation for Taxpayer Rights.
What does this mean?
If you’ve followed our ATO reform campaign, you’ll likely be aware that we’ve studied the US laws covering its tax office, the IRS. The US legislation stipulates specific “do’s and don’ts” with which the IRS must comply to treat taxpayers fairly. And there’s a watchdog, the Taxpayer Advocate, with real powers. We presented our full report on this to the Parliamentary Committee in mid-2020. Here’s a summary.
We’re very pleased to see that the Committee Report calls for substantial reforms to ATO administration with significant elements drawn from the US laws. The Committee looked at the US closely, including interviewing the retired US Taxpayer Advocate.
The Committee has 19 recommendations all of which strongly we endorse. The key highlights include that the ATO:
- would not be able to collect a debt until all appeals (tribunal/court) have been decided. In fact, the Morrison government has already committed to this. Watch Small Business Minister Stuart Roberts in Parliament 13 April this year.
- bear the onus of proof of allegations of fraud or evasion. The Committee notes that this has been recommended in past years but never implemented.
- cannot charge an interest rate on debts that’s greater than the interest rate the government pays.
What would probably stagger most Australians is that such ‘reforms’ are needed. It demonstrates just how dictatorial are the current powers of the ATO.
But there’s more. The Committee’s recommendations also include:
- A Taxpayer Bill of Rights be developed and promoted. (Here’s the US Taxpayer Bill of Rights.)
- The Australian Inspector-General of Taxation be renamed the Taxpayer Advocate and the “..the role aligns more closely with the powers and structure of the US Taxpayer Advocate.”
The Committee Report is a major step forward for a better, more efficient and fairer tax collections system. It’s important to note that when Jason Falinski MP (Liberal) presented the report to Parliament, the Deputy Chair Julie Owens MP (Labor) also endorsed the report. That is, the recommendations have support across the (normal) political divide. This is the Australian Parliament working at its best.
In presenting the report to Parliament, the chair of the committee Jason Falinski MP first praised the ATO for improvements it has made to date. He particularly praised the ATO’s work to implement JobKeeper. We agree. That praise is well deserved. But Falinski went on to say that improvements must continue.
The ATO does a great job for Australia. But the evidence is overwhelming that, in the debt assessment and enforcement area, major abuse of taxpayers is endemic. The ABC covered this (again) just last week. See TV coverage and online articles.
Often big government organisations that have dictatorial powers are blind to the community and to the individual harm they do in the abuse of those powers. And they don’t view their abuse as abuse. They see the abuse as them doing their job!
These reforms recommended by the Tax and Revenue Committee are massively important. We hope the Morrison government will move to implementation. But also we would hope that the ATO would see the reforms as positive for them as an organisation as well as the community. We hope!