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Thursday, 20 November 1986
Page: 2570


Senator MESSNER(10.07) —I move:

That the following matters be referred to the Standing Committee on Finance and Government Operations-

(1) The particular procedures of the Commissioner of Taxation and the Administrative Appeals Tribunal, for-

(a) raising and amending income tax assessments;

(b) imposing penalties and interest on such assessments; and

(c) dealing with objections and appeals against them.

(2) Possible changes required to streamline and simplify the existing system and to safeguard the rights of taxpayers.

The history of this matter goes back to approximately June of this year when the debates on various tax reform Bills were undertaken in this place. Honourable senators will recall that one of the Bills which the Government sought to rush through the Senate at that time, which was explained at the time to be part of the taxation reform package, dealt with the transfer of jurisdiction of the appeals mechanisms within the Australian Taxation Office, previously undertaken by boards of review, to the Administrative Appeals Tribunal. That little matter, as it seemed to be at the time, was part of a major change in appeals mechanisms in the system by which taxpayers could seek justice under the taxation assessment law.

As is now becoming apparent, more and more concern about this matter is arising within the community. Consequently, honourable senators should examine the infringement of the rights of individual taxpayers in respect of their assessments. That is not the only concern that has arisen in recent times. The Government, through the Australian Taxation Office, has introduced a new system of self-assessment for taxpayers. Very broadly, this involves a change whereby people will lodge their taxation returns, receive assessment from the Tax Office almost automatically and pay any moneys due on those assessments. Under the various procedures that have been outlined by the Tax Office the taxpayer will not know whether such assessments are final until many years later. In fact, it is highly questionable whether any taxpayer will ever know whether any asessment issued by the Australian Taxation Office is ever final and consequently his obligation to pay tax is at an end. Therefore, the question arises as to whether taxpayers' rights are being infringed as a result of the introduction of that system. There is very little information from the Government and the Tax Office about the actual operation of these procedures.

This has been the cause of much more concern, too, as we realise that there have been substantial changes to the law under which the Tax Office can amend taxpayers' assessments. That, of course, occurred as part of the taxation package last June and was pushed through this place by the Government with very little debate. Those amendment procedures are very substantial and mean that virtually all amendments to assessments made by the Taxation Office are open-ended and consequently can go on ad infinitum. That represents a colossal transfer of power by the legislature to the bureaucrats in the Tax Office and represents very great possible and potential infringements of the rights of individual taxpayers.

Taken together with the new legislation-it has not yet reached the Senate but will be debated within the next week or two-which will allow the Taxation Office to go back an unlimited number of years to recover tax debts, whereas every other arrangement between debtors and creditors in this community is subject to the statute bar as it applies in each individual State, these matters have also raised very considerable concern about the possible infringement of taxpayers' rights. The Liberal and National parties will oppose that legislation when it comes before the Senate late next week. That matter, I think, also shows the way in which this Government tends to transfer the power of the legislature to the bureaucrats and administrators in the Tax Office.

Another example of this, of course, is the introduction of the Government's legislation-again, it has yet to be debated in the Senate-for the identification card. It has the effect of transferring enormous power from the legislature to the Taxation Office and gives it enormous opportunities to interfere in and invade the rights of ordinary taxpayers in the community. Consequently, this raises considerable concern in the community as to the powers that are being generated in favour of the bureaucrats.

The point that must be made is that there has been a growing degree of disrespect for taxation laws as the laws have become far more complex and far more difficult for individuals in the community to interpret and apply to their individual circumstances. This has developed over many years and, I believe, is almost reaching a crisis point. It has also led to a perception in the community that the Tax Office is a big brother office, that it is a bullying operation, and that it has powers of enormous consequence which tend to infringe the rights of ordinary people. This widespread perception of the big brother attitudes within the Tax Office I believe is leading to a counter-revolution amongst taxpayers, many of whom are simply prepared to break the law and not declare income, thus leading them down the paths of evasive activity and also, it would transpire, criminal activity. That is, of course, something which ought not be encouraged by any government or any legislature, and certainly not by the Taxation Office.

We must realise that the actions undertaken by the Taxation Office in seeking to issue assessments virtually at will, without any regard to the consequences-if you like as a try-on to see whether taxpayers will cough up the money rather than go to the expense of appealing to the courts-lead to a very high degree of disrespect for the law. We have to recognise that this is happening. All of us, as members of the Senate, have had circumstances and situations raised with us by constituents who have brought to us cases where they have been oppressed by the Taxation Office, where they feel they have been unjustly treated, where they feel they have been put under pressure by the Taxation Office and where assessments have been issued without due regard to the consequences.

Those matters are all leading to this growing disrespect for the tax law and, in particular, the operations of the Taxation Office. There is a crisis of confidence in the operation of the Taxation Office. This is not just demonstrated by widespread anecdotal experience in the community or perceptions in the community; it is borne out by official reports. I instance the recent reports from the Auditor-General which pointed out the malpractice and mismanagement within the Taxation Office. Inadequate attention has been paid to the ordinary duties of tax officials and literally millions of dollars have been allowed to roll out the window by virtue of tax evasion because the Taxation Commissioner simply has not done the job that he was appointed to do. Mismanagement has led to those things happening.

As a result of the perception that has developed in the Hawke Labor Government that something needs to be done, or at least to be seen to be done, the powers of the Taxation Commissioner have been increased by numerous pieces of legislation, as I outlined earlier. Those actions by the Hawke Labor Government certainly have not enhanced the position and the perception of the Taxation Office in the community generally; in fact, it has been the reverse. This transfer of power to the Taxation Office, if it continues to increase, holds grave dangers for us all. We should all be very concerned about this development of enormous big brother power within a bureaucracy such as the Taxation Office.

That is not to say that the Taxation Office has not had enormous powers in the past. Of course it has. It has had powers which it has exercised and which it should have exercised more diligently in the past to chase up tax evasion and avoidance. The powers already exist in the law. Section 260 of the Income Tax Assessment Act as it used to exist could have been exercised in many cases but was not. Yet just recently we found that the Taxation Office had suddenly rediscovered section 260 of the Tax Act which, of course, was effectively written out of the law back in 1981, and has sought to issue 10 000 assessments to taxpayers off the top of its head, some seven or eight years after the time in which the original assessments could have been issued, paid and cleared up.

Those kinds of activities, which will have the effect of wiping out thousands of businesses in Australia, really are true examples of the trends that are occurring under this Government by virtue of its inability to face issues and to deal positively with the bureaucracy. This Government is abrogating its responsibilities by transferring, by virtue of its domination of the Parliament, powers to the bureaucracy and leaving it to the Australian Taxation Office to pick up the pieces. That is fine so long as there is some supervision of the activities of the bureaucrats. That is where we come to the point of this particular motion. It is quite clear that there is a need, because of this growing disrespect for the law, because of the growing disrespect for the operations of the Taxation Commissioner, because of the growing abrogation by the Hawke Labor Government of its duties and because of its transfer to the bureaucracy of enormous powers, powers of which it does not know the limits, for the Parliament, through the Senate Standing Committee on Finance and Government Operations, to examine the enormous and very rapid changes that have occurred in the administration of the tax law in the last year or so to see what is actually happening to taxpayers' rights.

I do not have to remind honourable senators that this is a parliament of the British tradition. All of us would understand the powers of taxation and the problems that taxation has caused over the centuries in the fights between the House of Lords and the House of Commons and between various forces in society. The civil war in Britain was fought over taxation issues. Similarly, George III lost the northern American colonies as a result of taxation issues of this kind. This issue goes to the core of what this Parliament is about and it ought to be examined very searchingly and with a sense of diligence, concern and sincerity by this Government and this Parliament.

The people of Australia have only this Parliament to appeal to when enormous power is transferred to individuals within the bureaucracy. The powers that have been transferred by virtue of the legislation that has been passed by this Parliament-apparently, more legislation is about to be passed-are absolutely enormous. I do not believe that the people of Australia have yet to come to understand the full effect of what this Hawke Labor Government has done in effecting transfers of power. Consequently, I have moved this motion so that the Senate Standing Committee on Finance and Government Operations can investigate the issues concerned, look into the ways in which people's rights are being infringed, develop alternatives and come back to the Senate with suggestions as to how people's rights can be safeguarded in these circumstances.