The Australian Taxpayers’ Alliance (ATA) has made a submission to the Standing Committee on Tax and Revenue for their inquiry into Taxpayer Engagement with the Tax System. In the submission, the ATA outlines a series of recommendations to improve our tax system and provide better taxpayer engagement.
One of the recommendations was to urge the government to implement a tax expenditure transparency portal. A transparency portal will allow taxpayers to see how taxes are being spent, hold the government to account over spending and identify waste.
In addition, the ATA calls upon the government to take steps towards simplifying our tax laws with a fairer and flatter system. The complexity of the current system means the cost of compliance is roughly $40 billion with almost half of that burden being felt by small business. Moreover, with over 14,000 pages of tax laws alone, our tax system risks putting taxpayers who are attempting to do the right thing in the crosshairs of the taxation office.
This results in many individuals and small businesses facing bankruptcy or a long expensive uphill legal battle where the burden is on them to prove their innocence rather than on the ATO to prove guilt of evasion or fraud. As such the ATA, has used this submission to also call for the strengthening of protections for taxpayers. As part of this, the submission highlights the example of Rod Douglass, a contractor who was accused of evasion or fraud and handed a tax bill back dated over 10 years totalling over half a million dollars.
Only after two years of legal proceedings, did the ATO admit that the facts were “incorrectly formed” and withdrew their allegations. But how many more people have found themselves in the same situation and didn’t can fight a long expensive legal battle to clear their name? With such a complex system that risks bankrupting the most honest of taxpayers, it is little wonder almost 75% of individuals hire a tax agent to help them with their return. Even those with “simple tax affairs” are forking out almost $400 a year on help.
A simpler, fairer and flatter tax system will reduce the costs of compliance for individuals and business and reduce the risks of people falling foul of the system whilst more accountability on the side of the government will ensure that money raised is used appropriately and efficiently.