Saturday, December 3, 2022

Desire to arm the ATO

Recent stories

Chris Jordan AO is the Commissioner of Taxation. He was previously Chair of KPMG and partner in Charge of the New South Wales Tax and Legal Division of KPMG.

armed officer

In a speech given at the 14th International Tax Administration Conference hosted by UNSW Sydney that I attended last November, Commissioner Jordan made many comments. Three in particular stand out.

In the context of meeting with other Commissioners for overseas jurisdictions he said:

”Some have criminal powers, and their officers have the power to carry guns. I wish I had that power!”

This seemed to be an unscripted comment.

The Australian position is that the Commonwealth Director of Public Prosecutions has the power to commence criminal prosecution but not the Australian Taxation Office. It is not a prosecutor of the law but a revenue collection agency. There is a difference.

The Australian Parliament has correctly not authorised the Australian Taxation Officers to enter premises with guns strapped to their gun belts for a routine tax audit. It seems the Commissioner wishes otherwise.

It is not surprising that Jennie Granger, now Professor of Practice at the School of Tax and Business Law, UNSW Business School (part time), said the following day she was somewhat surprised at the Commissioner’s remark about guns. It was her opening comment following the usual opening remarks!

Jennie Granger was former Second Commissioner Law at the Australian Taxation Office (left 2012) and then with Her Majesty’s Revenue Commission as Director General for customer compliance for five years.

The Commissioner’s third remark concerned his opinions about the tax gap as a proportion of income tax paid.

(This issue is mentioned on page 40 of the online Australian Taxation Office annual report 2020-21. The 2019-20 Annual Report has a fuller commentary here.)

The Commissioner’s remarks in November 2021 clearly put the ‘estimated’ gap at the feet of small businesses.

It is clear this tax gap is an estimate. It is unclear how the estimate is made. The Commissioner did spend a lot of time addressing the increasing role of data collection. One can surmise from this that these estimates are a product of some algorithm. As the oft quoted saying states: rubbish in, rubbish out.

Is this the reason the Commissioner wants revenue officers to carry guns, so the tax gap can be filled, no matter what?

Commissioner Jordan was the first appointment in 2013 as the 12th Commissioner of Taxation from the private sector. He had never worked in the tax enforcement area as the compliance agency. He had always worked on the side of the private sector, some might say perhaps unfairly, those who do not want to pay any tax!



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