Government Senators' dissenting report - Interim Report of the Select Committee on the Scrutiny of New Taxes–Report
on the progress of proceedings: new taxes monitoring database
On Thursday 30 September 2010 the Senate established the
Select Committee on the Scrutiny of New Taxes (the Committee) to inquire into
the following matters:
(a) New
taxes proposed for Australia, including:
(i) the minerals resource rent tax
and expanded petroleum resource rent tax;
(ii) a carbon tax, or any other mechanism to put a price
on carbon, and
(iii) any other new
taxes proposed by Government, including significant changes to existing tax
arrangements;
(b) the
short and long term impact of those new taxes on the economy, industry, trade,
jobs, investment, the cost of living, electricity prices and the Federation;
(c)
estimated revenue from those new taxes and any related spending commitments;
(d) the
likely effectiveness of these taxes and related policies in achieving their
stated policy objectives;
(e) any
administrative implementation issues at a Commonwealth, state and territory
level;
(f) an
international comparison of relevant taxation arrangements;
(g)
alternatives to any proposed new taxes, including direct action alternatives;
and
(h) any
other related matter.Â
The
terms of reference of the committee have been the subject of disagreement
between members of the committee. Coalition members of the committee have taken
the view that the committee has a broad remit to inquire into a range of
matters, the range and scope of which shall be determined by the Coalition
members of the committee, despite this type of remit having not necessarily
been contemplated by the Senate when it resolved to establish the committee.
The
decision of the Coalition members of the committee to inquire into the Higher
Education Legislation Amendment (Student Services and Amenities) Bill 2010 was,
in the opinion of government Senators, a case in point.
It was
then and it remains the view of the government members of the committee, based
on the advice the committee received on the nature of the student services and
amenities charge, that it is not a tax and the inquiry into it was in all
likelihood beyond the committee's terms of reference. We have outlined our
reasons for this view in our dissenting report on the outcome of that inquiry
and there is no need to canvass it in any further detail in this report, other
than to provide background to our view on this latest interim report.
In what
the Coalition Senators describe in their report as a measure to assist the
committee's inquiries, “the committee has been monitoring Government
announcements of policy and legislative change as well as media articles that
suggest policy change. This information is being collated and is circulated
periodically to inform the committee's discussions.”
It will
do nothing of the sort.
What the
so-called database set out in Chapter 2 does is merely provide references to a
series of Australian Taxation Office rulings and determinations along with
references to media reports and court judgements. It takes no account of the
accuracy or otherwise of what are, at times, speculative media reports and we
fail to see how a reference to an ATO decision impact statement on whether or
not a stretched Hummer vehicle is a limousine or more akin to a bus will assist
the committee or the Senate in deliberating over tax policy.
Government
Senators seriously question the practical value of the so-called database to
the deliberations of the committee and the Senate. We also note that the
compilation of the database also places what we believe to be a burden on the
already heavily stretched resources of the Committee secretariat. With this in
mind, government Senators moved the following at a recent meeting of the
Committee:
The Committee notes the extensive workloads placed
on Senate committee secretariats due to the increasing number of references to
committees.
The Committee notes the resources available to
Senators both through their own research staff and the Parliamentary Library.
The Committee therefore resolves in the interest of
reducing workload and allowing the Secretariat to focus on key priorities to
relieve the Secretariat of the task of collating news articles on new taxes and
ATO determinations and to discontinue the new taxes database as this
information can be readily accessed through other means.
This
motion was defeated however, our concerns remain.
In
relation to whether or not tax rulings and determinations are relevant to the
committee's terms of reference, the following correspondence from the
Commissioner of Taxation, Mr. Michael D'Ascenzo to the committee chair, Senator
Cormann is instructive. It is as well to set out Mr. D'Ascenzo's correspondence
in full:
Senator Mathias Cormann
Chair
Senate Select Committee on the
Scrutiny of New Taxes
PO Box 6100
Parliament House
Canberra ACT 2600
Dear Senator
Draft Taxation Rulings and Determinations
Thank you for your letter of 13 December 2010 seeking
additional information in relation to the ATO's recently published draft
taxation rulings and determinations.
In your letter you note that the terms of reference for
the Senate Select Committee on the Scrutiny of New Taxes “...include inquiring
into any new taxes proposed by the government, including significant changes to
existing tax arrangements”.
It is unclear to me why the Committee would be
considering taxation rulings and determinations because they do not impose new
taxes or make significant changes to existing arrangements – they merely
clarify my view of how existing tax arrangements work.
The view of rulings as law making is a common
misconception. Taxation rulings and determinations are an expression of my view
on the interpretation of the existing law. They do not change the law. However,
they do influence taxpayer behaviour and therefore we are very careful to
ensure they are of the highest integrity.
Draft rulings such as those referred to in your letter
are published in order to enable consultation with the community before they
are finalised. For example, we consult widely in their development and benefit
from the views of private sector experts in our Public Rulings Panels.
A comprehensive review of our public rulings program by
the Australian National Audit Office found public rulings to be of a high
integrity.
As final public rulings represent the Commissioner's
authoritative view of how the existing law applies, it is then the duty of the
Commissioner to apply the law in a manner consistent with those rulings.
Where policy considerations apply, we often benefit from
the views of Treasury. However, it remains our duty to interpret the statute in
accordance with is tenor. It is then a matter for government whether any
legislative amendment is appropriate.
For these reasons, in my view your request does not
relate to new taxes but to administrative matters that fall within my statutory
responsibility. However if you consider it desirable, I would be pleased to
meet with you and your Committee on this matter. I have attached material that
more fully explains Australia's public ruling system. However, I and my
officers are available to clarify for your Committee the role which rulings
play, both generally and in relation to the draft and final rulings referred to
in your letter of 13 December 2010. I have asked my people to arrange such a
meeting at your convenience, subject of course to your thoughts.
Yours sincerely
(signed)
Michael D'Ascenzo
Commissioner of Taxation
22 December 2010
Based on
the explanation provided by the Commissioner of Taxation and having regard to
the actual content of the so-called database, government members of the
committee are of the view that it serves no useful purpose and only places an
administrative burden on the committee secretariat.
In their
report, the Coalition Senators state, “As the Government has introduced more
than $40 billion of new or increased taxes over the past three years the
committee views this process as a means of identifying and scrutinising new and
increased taxes as they are introduced by the government. Reporting these
findings on a regular basis will further expose the government's clandestine
efforts to increase the tax burden on all Australians.”
Firstly,
government members of the committee take issue with the figure of $40 billion.
It is an unsubstantiated claim in the Coalition Senators' report without
anything which would allow anyone reading the report to verify it. As is the
case with the Coalition's entire approach to such things, it is merely a figure
plucked from the air.
Secondly,
as discussed above, any reading of chapter 2 reveals that contrary to the claim
of Coalition Senators, the process adopted in compiling the so-called database
does nothing to identify and scrutinise “new and increased taxes”.
Thirdly,
to the extent that Coalition Senators actually believe that this process will
somehow, “further expose the government's clandestine efforts to increase the
tax burden on all Australians”, suggests merely a tendency toward conspiracy
theory. As is clear from Chapter 2 of the majority report and for the reasons
we outline, the process adopted by Coalition Senators does nothing to inform,
expose or educate anyone, the Senate included, about taxation policy
clandestine or otherwise.
Senator
Steve Hutchins
Deputy
Chair
Senator
Doug Cameron
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