ATO’s tax on natural justice

The Australian, April 14, 2018, Grace Collier

Don’t be a fool and assume you have certain rights. You may think if you are accused of something the presumption of innocence applies unless proven otherwise in a court.

You may think the authorities are not allowed to bust down your doors in the middle of the night unless they have a warrant.

You may think no one in the government can just whisk money out of your bank account without your permission, or sell your house from under you, without going through some sort of process first where it has been established that a debt is owed by you and orders are made that it must be paid.

These individual rights you think you have are what separates a free democracy from a dictatorship. In all areas of law, the listed assumptions about your rights are correct — except when it comes to taxation.

If a person within the Australian Taxation Office decides that in their opinion you owe a debt — and they have the power to choose the amount — then by law you owe that money, whether that debt is real or not. You can dispute the debt in court, but you must pay it first. In the meantime, the ATO is entitled to collect the debt off you in any way it wishes. It has the legal power simply to take the money out of your bank account, sell your house and raid your business or home.

In this country, taxpayers have fewer rights than murderers. This was pointed out on Monday night by a tax barrister on the ABC’s Four Corners program. If you missed it, I strongly recommend you watch online.

Last month, this column touched on Minister for Revenue and Financial Services Kelly O’Dwyer’s since-shelved plan to give the ATO power to report alleged debts to external credit agencies (“O’Dwyer unchains tax office bullies”, 17/3). After reading the column, which detailed a submission by Self-Employed Australia, tax commissioner Chris Jordan went to a meeting with officials from two unions. He referenced the column and asked the unions to support him by rebutting my allegations.

Before Jordan’s union mates could put their shoulder to the wheel, the Four Corners program aired. It is now blindingly apparent that the allegations were true, and the sound of wringing hands and gnashing teeth is ricocheting through ATO headquarters. Denial, anger, despair: these are the emotions senior executives are experiencing. To them I say: just imagine how your victims felt when they lost their incomes and assets, and had their lives ruined.

Since the program aired the floodgates have opened, and there are many more stories that will come to light in future.

As we all know, thanks to high government spending, there is a desperate and ever-expanding need for revenue, and the evidence of waste is always apparent. Just a small example, for your consideration:

Unsolicited emails from a National Disability Insurance Scheme provider regularly land in my inbox. It wants me to register a tax-exempt, not-for-profit social franchise and start a community choir. Me, a community choir, can you imagine? My choir must accept anyone who wants to sing in it and no auditions can occur because auditions exclude people who cannot sing. I am to hold the choir every week because it helps with loneliness. In return, the NDIS will pay me $500 a year for every NDIS recipient who sings in my choir.

The choir idea sounds like a wonderful thing except taxpayers should not be funding it. It is precisely because of this sort of nonsense many people who pay a lot of tax resent it.

Nevertheless, the price of a civilised society is taxation. If people do owe a tax debt it must be paid and, while tax minimisation is legal, tax avoidance is not and should be punished. But ATO employees have unfettered power. These people, who are not bad people, by the way, sit in their securely tenured public service bubbles without any understanding of what it is like to create their own income, and income for others, out of thin air every month.

Where there is a system in which individuals are issued unfettered and unchecked power, mistakes and abuses will occur, and those are unacceptable because the impact is so great. When an ATO person decides someone owes a debt, and decides to collect it, then people’s lives can be destroyed.

On March 28, Jordan spoke to federal parliament’s Standing Committee on Tax and Revenue. He disclosed that every week during the 2016-17 year, 37 people were pushed by the ATO into bankruptcy or a wind-up of their income-earning activity. And every week 455 people had money taken from their bank account by the ATO without their agreement.

There are some in our community who find the ATO’s powers acceptable. They think the ATO should be able to mercilessly extract any amount of money it wishes from anybody in any way it wants to, without any higher body having any ability to stop it. These people belong in a communist dictatorship.

For those who believe in fairness, legal process, justice, social mobility and individual freedom, these are worrying times. We have passed a dangerous tipping point. Now, most households pay no net tax and, as such, the few are supporting the many. The majority have an insatiable demand for more and more funds, the minority are providing those funds, and the agency that collects the funds has draconian powers, which it is abusing, causing catastrophic outcomes.

Those with income and assets should be aware their position is precarious and their future fraught with danger. Australia looks like a stagnant pond where the piranhas outnumber the goldfish and the water level is dropping.