Chapter 1

Introduction

Background

1.1        On 22 November 2010, the Senate referred the amendments to the Tax Laws Amendment (2010 Measures No. 4) Bill 2010 proposed by Senator Cormann on sheet 7010 to the Economics References Committee for inquiry and report by 31 March 2011.

1.2        The amendments would introduce a new section 174A of the Income Tax Assessment Act 1936 which would require the Australian Taxation Office (ATO) to provide taxpayers with a tax receipt along with their notices of assessment. The tax receipt would provide a breakdown of how the amount of the assessment was spent on different government functions in the financial year (calculated by applying the proportion of the Budget expenditure on each function to the amount of the assessment). The tax receipt would also provide information on the level of Australian government net debt.

1.3        On introducing the amendments in the Senate, Senator Cormann stated:

Taxpayers do not have a good appreciation of where the tax they pay is spent by the government. Yes, the information is publicly available in the budget papers but these are not easily accessed or easily understood for that matter. Taxpayers also have a right to know how much the government spends in excess of funds collected from taxes and other sources...The difficulty in obtaining and understanding this sort of information leads to a situation where government spending is not subject to as much scrutiny by taxpayers as it should be.[1]

Conduct of the inquiry

1.4        The committee advertised the inquiry in The Australian on 8 December 2010 and invited written submissions by 7 January 2011. The secretariat wrote to a number of academics, interest groups and other relevant stakeholders inviting submissions. The committee received one submission which is listed in Appendix 1.

1.5        A public hearing was held on 9 February 2011 in Canberra. The committee received evidence from Treasury officials and officers from the ATO. A list of those who gave evidence is presented in Appendix 2. An interim report was tabled on 31 March 2011 requesting an extension to 8 April 2011.

1.6        The committee thanks those who participated in the inquiry.

Structure of the report

1.7        This report has five chapters:

• Chapter 2 examines the current ways that information on government debt and expenditure is made available to taxpayers, and the accessibility and utility of this information to taxpayers.
• Chapter 3 notes the varied sources of government revenue in addition to income tax, and considers any associated complications which are likely to arise when developing a tax receipt.
• The specific material which the amendments require be addressed in a tax receipt are examined in Chapter 4.
• Finally, Chapter 5 reviews the issues associated with introducing a tax receipt programme which are evident but not covered by the other chapters of this report. This chapter also examines any alternative proposals to a paper tax receipt programme that were put to the committee.

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