t seems everyone is redesigning the Australian taxation system. In the last few months there have been rumours that a US academic has already done it for us; also rumoured is that the Australian Treasurer and some of his officials designed it on a sheet of butcher’s paper when they came back from holiday. Less rumoured is the announcement of a study to compare the Australian taxation system with other such systems in the world.
The Australian Taxation Office (ATO) has a long tradition of navel-gazing, so much so that it once put out a tender document to communication consultants inviting them to help it ‘position’ itself within the Australian community. Hey guys, you’re the Tax Office, you collect tax!
Looking at taxation systems in other part of the world may on the face of it seem like a welcome break from the navel-gazing, but I suspect not.
It may come as a surprise to all those well-meaning Treasury and ATO officials and those commissioned to undertake this latest study that they are looking in the wrong place.
Whatever may be happening in other parts of the world, in Australia the ATO is only peripherally part of the Australian taxation ‘system’—albeit a powerful part, but a marginal player no less. In keeping with government policy, the ATO has outsourced most of its activity. It has gone on permanent institutional dialysis.
It has outsourced the complex administration of the system and the collection of taxes. Every individual taxpayer and business in Australia now administers the tax system. Instead of a few thousand people in Canberra administering the system for us, millions of us, every day, throughout Australia, run the system for the ATO—and pay for the privilege.
Instead of dealing with the complexity internally on behalf of taxpayers, the ATO has thrown at each us an administrative manual in the form of the appalling TaxPack and other execrable documents and just told us to get on with it. If we don’t, or if we make a mistake, they throw another type of book at us. The ATO sets the administrative rules and procedures, polices us to make sure we follow them, and then penalises us when we break the rules. (Somewhere in there is a denial of natural justice.)
What some individual tax payers and most businesses do is pay others to administer the taxation system for us—accountants and bookkeepers who stay up-to-date with the ever-changing administrative and legal complexity, keep the records, do the calculations, collect the taxes, and hand them over to the ATO. Estimates vary, but the cost of this part of the tax system is at the very least 10 times the cost of running the ATO.
The ATO has even distanced itself from its obligations to us as citizens and taxpayers by calling us ‘clients’. No wonder it needs consultants to advise it on its ‘position’.
The ATO under strong government direction has long since abrogated its responsibility for our taxation system. What hubris to now suggest that it or the Treasury is going to redesign the system when they don’t even pay for it or run it.
As you may gather, I am not impressed—from which you should not assume that I am anti-taxation. Far from it. I think I am extraordinarily privileged to live in a country which collects taxes and distributes them for the common good. There are countries where this does not happen, and generally they are not nice places for ordinary people to live in. But by forcing us to run a taxation system that is onerous, undignified, and Kaffkaesque, our government does a considerable disservice to us as citizens and tax payers. What should be a privilege has turned into a privation, undermining the long-term trust between citizen and state.
So, to those people charged with the task of redesigning the Australian taxation system, can I suggest that you redefine its boundaries and the ATO’s ‘position’ within that, and start by looking in the opposite direction to the navel.