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Tuesday, 19 August 2003
Page: 18819


Mr BILLSON (2:18 PM) —My question is to the Treasurer. Would the Treasurer advise the House what action the Australian Taxation Office has taken to crack down on the cash economy? Is the Treasurer aware of any alternative tax policies?


Mr COSTELLO (Treasurer) —I thank the honourable member for Dunkley for his question. I can inform him that yesterday the Commissioner of Taxation released the tax office compliance program for 2003-04. This year the tax office will undertake over 70,000 compliance reviews to deal with businesses operating in the cash economy, which will be 25,000 more than last year. More than 30,000 businesses can expect to be visited by 660 tax officers specialising in the cash economy, and there will be another 2,400 officers in the field enforcing compliance generally. In his press release when he announced this yesterday the commissioner said:

... industries to be scrutinised include restaurants, cafes, takeaways, taxis, hairdressers—


Mr Latham —About time.


Mr COSTELLO —The member for Werriwa said, `About time.' It is about time that we look at the taxi industry in Sydney. They have a lot of bad debts. There are people who get intoxicated, get into taxis and do not pay their bills. It is hard to believe, but it is true. The commissioner continued:

... hairdressers, cleaning services, scrap metal dealers, computer retailers ...

As the commissioner noted in his press release yesterday, the ANAO audited the performance of the tax office in relation to the cash economy and found that there had been a compliance dividend of $3.5 billion over three years of additional tax raised because of the new tax system. Let me say that again: the new tax system, as found by an ANAO audit, has produced a compliance dividend of $3.5 billion in excess of what the government said would be the case when it brought the new tax system into effect from 1 July 2000.

In addition to that, the Commissioner of Taxation notes in his release—and I will table this release—that the tools which were introduced with the new tax system have given him additional measures to be used to clamp down on the cash economy. He notes that the Australian business number, which has to be quoted for suppliers, has raised over $127 million in payments withheld. He also notes that the new tax system provides real-time information and gives the ability to crossmatch income tax and GST information. From the government's point of view, those tools should be used in relation to the cash economy—and they are powerful tools, which the tax commissioner notes. This increased program comes about because not in this year's budget but in last year's budget the government allocated an extra $1.5 billion over four years to employ more inspectors to lift the number of businesses to be visited and compliance reviews. That was a decision which the government put in place in the May 2002 budget and which is now starting to pay dividends.

I want to finish by correcting one thing. The member for Werriwa has falsely claimed today that the tax commissioner has estimated the black economy at 15 per cent of GDP. This is what he did: he walked up to a group of cameras and he said, `The tax commissioner, Mr Carmody, has estimated the black economy has blown out to 15 per cent of GDP.' As usual, that was false and a verballing of the tax commissioner.

Opposition members interjecting


Mr COSTELLO —Yes, a verballing of the tax commissioner.

Government members interjecting



Mr COSTELLO —I will tell you what he said—the member for Werriwa said, `What did he say?' He went on The World Today and he said:

I understand it has been claimed by Mr Latham that I have confirmed a figure of the black economy of 15 per cent of GDP. I've done no such thing. I place no weight at all in the sort of macro analysis that produces that sort of figure, and with good reason.

The OECD has referred to that sort of analysis as being only good to produce spectacularly high measures, but with no sound scientific base.

I think the tax commissioner is owed an apology from the member for Werriwa today.


Mr Latham —I seek leave to table the statement by Mr Carmody on National Nine News last night, when he said—

Leave not granted.