Last week, The Tax Institute wrote to the Assistant Treasurer, The Hon David Bradbury MP to set out our view on the ethical framework that should apply to all participants in the tax consultation process.
As members will agree, effective consultation is essential to produce tax laws that are in the broader national interest. The Government's commitment to construct a framework for consultation stemmed from a recent recommendation of the Board of Taxation. We were pleased to have this Board of Taxation report and the Government's response publicly released at our Queensland Corporate Tax Retreat in September.
While consultation has improved significantly in both quantity and quality over the last decade, it is encouraging to see the Government's attention and commitment to continuously improve the tax law design process. We look forward to further discussions in relation to the development of the ethical framework.
An outcome in the broader "national interest" means one that yields the greatest benefit for the broader Australian economy and community (rather than an outcome that is either pro-revenue or pro-taxpayer). Furthermore, the consultation process will benefit from greater clarity as to the rights and responsibilities of all parties. As such, we have recommended that the ethical framework apply equally to both Government and external participants.
Our proposed ethical framework acknowledges that all participants should:
- recognise the role of the tax system to generate Government revenue in a manner consistent with Government policy and judicial interpretation of tax laws
- recognise the need to balance the interests of taxpayers directly affected by the relevant tax measure with the need to safeguard the integrity of the tax system and the broader national interest
- recognise the need to minimise the compliance cost impost of the relevant tax measure and the tax system more broadly, for taxpayers and the ATO
- recognise the need for an appropriate balance between legislative certainty and sound interpretation/administration
- be required to be fully informed of all the details made available in relation to the relevant tax measure before engaging in consultation
- demonstrate mutual respect for the expertise, contributions and role of all participants. This includes an understanding on the part of Government participants that while external participants are informed by the provision of private advice, their contributions to the consultation process are motivated by national interest
- be willing to offer insights and opinions on tax policy and implementation that may be contrary to their self-interest, the interests of their clients or the narrower interests of revenue protection i.e. all participants should recognise that an outcome in the national interest is one which maximises the benefit for the broader Australian economy and community
- be willing, in the interests of transparency, to provide additional information/clarity where possible and in a timely fashion if so requested by other participants
- recognise the need to identify all flow-on effects of the relevant measure as well as interactions with other laws/regulatory frameworks, regardless of the impact of such effects/interactions, and
- respect the scope of the consultation.
We have also noted that the following pre-conditions for consultation need to be satisfied before effective application of the ethical framework will be possible:
- appropriate definition of the scope and nature of the consultation
- sufficient time for preparation and participation in consultation
- a commitment from Treasury and/or the ATO to undertaking consultation on policy aspects where possible and to disclose the nature of and framework within which such consultation has been undertaken
- a commitment from Treasury to provide feedback on consultation efforts and commission post-implementation reviews in relation to new tax measures where possible and appropriate, and
- a commitment from Treasury to transparency with respect to time frames for consultation.
We look forward to engaging further with the Government on the development of this framework, which should provide greater clarity as to the rights and responsibilities of all parties thereby improving the tax consultation and tax law design process more broadly.
Please feel free to contact me at Tax Policy with any queries or to discuss in further detail.
Robert Jeremenko CTA is Senior Tax Counsel of The Tax Institute.
The Tax Institute is Australia’s leading professional association in tax. Its 13,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.