Penny Wong (SA, Australian Labor Party, Minister for Finance and Deregulation) Share this | Link to this | Hansard source

I present three government responses to committee reports as listed at item 15 on today’s Order of Business. In accordance with the usual practice, I seek leave to incorporate the documents in Hansard.

Leave granted.

The documents read as follows—

Senate Economics Reference Committee Inquiry into Augmented Tax Assessments Commonwealth Government Response

BACKGROUND

On 17 November 2010, the Opposition first introduced amendments to the tax laws which would have required the Australian Taxation Office (ATO) to augment individual taxpayers’ notices of assessment with personalised tax receipts.

This tax receipt would breakdown how an individual’s taxes were notionally spent by the Government (into areas such as welfare, education, health and defence) based on a nominal distribution of Budget expenses. The receipt would also have purported to show the individual’s ‘share’ of Australian Government net debt.

After comprehensively examining the proposal, the Government determined that the proposed amendments had a variety of problems.

First, the proposal unnecessarily complicated the income tax assessment process by linking the tax receipt to the service of the notice of assessment. The Commissioner of Taxation (Commissioner) is responsible for assessing a taxpayer’s amount of taxable income, as well as their tax payable. After this assessment is made, the Commissioner is responsible for serving a notice of this assessment upon the taxpayer. Making the tax receipt part of this assessment process creates a significant risk that taxpayers may be able to challenge the service of their notice of assessment if there is a problem with their tax receipt. Successful challenges may also prevent the collection of any tax payable in similar situations until the problem is rectified, and a valid notice served.

Second, the other information that would be included in the tax receipt would not reflect an individual’s true financial relationship with the Government, as it would not take into account Government payments and general tax expenditure, nor all taxpayers. Nor would it allow for situations where tax is assessed but never paid by an individual.

Third, calculating a taxpayer’s ‘share’ of Australian Government net debt would be very misleading, as it would not be indicative of any personal obligation the individual taxpayer has or may have in the future.

Fourth, the proposal gave the ATO a very short timeframe for implementing the requisite system changes – they would be required to be operational by 1 July 2011.

Finally, there were a significant number of drafting problems with the proposed draft legislation. This included what appear to be incorrect references to ‘financial year’ in the amendment which should have been ‘income year’. Additionally, it was also unclear what terms like ‘the number of individual taxpayers’ and ‘the amount of the assessment’ meant.

In light of these concerns, the Government did not support the proposed amendments and the proposal was voted down in both the House of Representatives (on 17 November 2010) and the Senate (on 22 November 2010). However, the Senate referred the proposed amendments to the Senate Economics Reference Committee (the Committee) to report by 31 March 2011.

The Committee received one submission from the public on the issue, and heard evidence from both ATO and Treasury officials at a public hearing held on 9 February 2011.

On 2 March 2011, the Opposition proposed slightly different amendments in another attempt to require the ATO to provide tax receipts to individual taxpayers. These amendments differed in that they required the ATO to use the most recently published data, as at the time the individual’s notice of assessment was issued.

In effect, this modified proposal would require the information for the tax receipt to change the day after the release of the Budget, the Final Budget Outcomes (FBO) and the Mid-Year Economic and Fiscal Outlook (MYEFO) data. It would be administratively burdensome for the ATO to change this source data, and issue differently constituted tax receipts, within the same income year. Further, using the most recently published data would reduce the effectiveness of taxpayers being able to compare information contained in their tax receipt with that of others from the same income year, and could lead to confusion.

As such, the Government did not support these proposed amendments either, and the modified proposal was voted down in the House of Representatives on 2 March 2011.

On 8 April 2011, the Committee released its final report of inquiry into augmented tax assessments – which examined the Opposition’s original proposed amendments (as put forward on 17 November 2010). The report comprised of three sections:

The Government’s formal responses to the recommendations in the majority and minority reports are provided below. The Government notes that Senator Xenophon acknowledges the limitations of the Opposition’s proposal, and supports the provision of a user-friendly website which provides clear information about Government spending and budgetary measures.

SUMMARY OF GOVERNMENT RESPONSE

The Government agrees that it is important to provide taxpayers with comprehensive information about Government expenditure. However, the Government already publishes the aggregate information that would be provided in this tax receipt in its Budget and MYEFO documents. Further, the ATO had estimated that the departmental costs of implementing the original proposal put forward by the Opposition would be $9.9 million over four years.

As such, the Government considers this proposal both unnecessary and expensive, and when considered with the other significant problems identified above, the Government agrees that the proposal should not proceed.

GOVERNMENT RESPONSE TO MAJORITY REPORT RECOMMENDATIONS

Recommendation 1

The committee recommends that the proposal be amended to allow the most recently available figure or estimate of the total number of taxpayers to be used to calculate an individual taxpayer's share of government debt.

The Government does not accept this recommendation.

If the tax receipt proposal was to proceed, the most recently available and reliable data on the number of taxpayers should be used to generate the receipt. However, it is unclear who would constitute a taxpayer for the purposes of calculating an individual’s ‘share’ of government debt.

More significantly though, calculating an individual’s ‘share’ of net debt is misleading, as it does not represent any personal obligation owed by the relevant taxpayer.

Furthermore, the ambiguity of this calculation may exacerbate the risk of a taxpayer being able to challenge the tax assessment process, since this proposal links the tax receipt (and the information contained therein) with the service of a taxpayer’s notice of assessment. This significant risk is not addressed in this or any other recommendation from the Committee.

Recommendation 2

The committee recommends that consideration be given to modifying the amendments so that the names given to the functions of government expenditure correspond with those used in the documents published during the Budget process.

The Government does not support the tax receipt proposal. As such, it does not accept this recommendation. However, if the proposal went ahead, this recommendation would ensure that the ATO could use a convenient and reliable source of information when populating an individual’s tax receipt.

The Government notes that even if the Parliament agreed to implement the Opposition’s proposal, this recommendation only addresses one problem with the proposal, and does not address any of the broader problems identified earlier.

Recommendation 3

The committee recommends that an explanatory note be inserted into the amendments to allow the most up-to-date publicly available government estimates of Budget expenditure available on 30 June (of the relevant financial year) to be used in any calculations to breakdown how the amount of an individual's assessment was spent on different government functions.

The Government does not support the tax receipt proposal. As such, it does not accept this recommendation. However, if the proposal went ahead, this recommendation would address some of the Government’s concerns about data integrity and the administrative burdens faced by the ATO in having to periodically update data sources.

The Government notes that even if the Parliament agreed to implement the Opposition’s proposal, this recommendation only addresses one problem with the proposal, and does not address any of the broader problems identified earlier.

Recommendation 4

Subject to the committee's other recommendations being adopted, the committee recommends that the amendments to the Tax Laws Amendment (2010 Measures No. 4) Bill 2010 proposed by Senator Cormann on sheet 7010 be introduced as a Bill, and that the Bill be passed.

The Government does not accept this recommendation.

Although the Government agrees with the importance of providing taxpayers with relevant and reliable information about how their tax dollars are spent, it does not support the tax receipt proposal. As noted, a number of substantial problems with this proposal remain outstanding, and the Committee’s recommendations do not mitigate the Government’s concerns about them. However, the Government will continue to provide relevant information about government expenditure (as addressed in Recommendation 2 of the minority report).

GOVERNMENT RESPONSE TO MINORITY REPORT RECOMMENDATIONS

Recommendation 1

The Government should not consider supporting such a measure because information on the breakdown of spending at the time of lodgement will not be timely. At the time taxpayers expect to receive their assessment, the breakdown many not be accurate or final, and will either delay assessments or provide poor information.

The Government accepts this recommendation.

In light of the problems which have been identified earlier, the Government does not support the tax receipt proposal.

Recommendation 2

The Government should continue to maintain at least the current standard of accessible and available Government information on expenditure to provide the necessary transparency to all Australians.

The Government accepts this recommendation.

The Government will continue to provide the bulk of the information which was proposed to be included in the tax receipt, in its Budget and MYEFO documents. For example, pie charts which summarise the Government’s budgeted revenues and expenses are provided in the Budget Overview document each year.

Government Response to the Senate Select Committee on Scrutiny of New Taxes inquiry “The Student Amenities Fee – Another Tax by Another Name”

September 2011

The Government rejects the Committee’s assertion that the proposed student services and amenities fee is a tax. The conclusion expressed by the Committee on this point was unsupported by evidence. To the contrary, the Clerk of the Senate provided advice to the Committee that the proposed Student Services and Amenities Fee was not a tax, as did the Department of Education, Employment and Workplace Relations.

The Student Services and Amenities Fee is a fee for student services and amenities to be provided by higher education providers to their enrolled students. It is a decision for each higher education provider whether or not to charge a fee. The Bill does not raise general revenue for the Commonwealth.

The Government notes that the only term of reference cited by the Committee as providing the basis for its inquiry was the term of reference which allowed it to consider “any other related matter”.

The Committee’s report made the following three recommendations:

Recommendation 1

The Committee recommends that the Government publicly release an exposure draft of the instrument to amend the Administration Guidelines made under the Higher Education Support Act 2003 as soon as possible.

Recommendation 2

The Committee recommends that the Senate postpone consideration of the Higher Education Legislation Amendment (Student Services and Amenities) Bill 2010 until the draft instrument to amend the Administration Guidelines made under the Higher Education Support Act 2003 is publicly released.

Recommendation 3

The Committee recommends that the Senate reject the Higher Education Legislation Amendment (Student Services and Amenities) Bill 2010.

Response

Recommendation 1 – Noted. Administration Guidelines are currently being finalised and will be available well in advance of the implementation date. The Administration Guidelines will be published on the Department of Education, Employment and Workplace Relations’ website.

Recommendation 2 – Disagree. It is noted that Recommendation 2 is internally inconsistent with Recommendation 3. The Bill should be considered by the Senate in a timely fashion to ensure that students have the benefit of improved student services and amenities with effect from the new academic year in 2012.

Recommendation 3 – Disagree. The Government is committed to the Bill’s passage through the Senate in a timely fashion to ensure that students have the benefit of improved student services and amenities with effect from the new academic year in 2012.

Government Response to the Inquiry into the development of a digital repository and electronic distribution of the Parliamentary Papers Series by the Joint Committee on Publications

September 2011

Committee Recommendations

Recommendation 5

The committee recommends that author departments and agencies be required to provide electronic copies of documents at the same time print copies are provided for tabling in the Parliament.

Government Response

Agreed in principle.

The Department of the Prime Minister & Cabinet will issue a Tabling Circular to all agencies advising them of this requirement. However, to ensure that government documents are not made available electronically while they are under embargo, they will be published online as soon as possible after they have been tabled in the Parliament.