There must be an election coming up. You can tell by the fine-spun language in public commentary used by public-service mandarins to describe their state of the union. Take Commissioner of Taxation Michael D’Ascenzo as an example. Last week, he gave a speech to chief financial officers in Sydney titled “Creating the right environment: transparency, cooperation and certainty in tax” in which he praised the contribution of corporate Australia to our country’s revenue.
“Total large market revenue collections have increased from $61.5 billion in 2003-04 to $75.1 billion in 2005-06,” D’Ascenzo blustered. “The top 100 corporate enterprises contributed 67% of company tax collections.” In addition, to really get the egos into overdrive, he exulted: “These figures highlight the role of Australia’s large corporates as major contributors to our society. They reflect the hard work, investment, enterprise, and competitiveness of business, both in domestic and global terms.”
You could hear the clinking of expensive glasses filled with the best red as the chiefs celebrated with unaccustomed gusto as the end of a hard financial year loomed. Getting corporate Australia onside in an election year is important to the re-election hopes of the Liberals.
The only problem with D’Ascenzo’s spiel is that it only tells half the story. What he neglected to tell his high-browed audience was that he also raised $2.5 billion from audits during 2006, making them the biggest tax-cheating market segment. That is a whopping 36% of the total of all revenue raised from the tax office compliance program. However, it’s the penalties where the story really starts. The large business segment makes up 58% of the total penalties across the market segments. The higher the penalty the higher the culpability so the auditors say. See table below from the commissioner’s annual report:
So how does D’Ascenzo deal with the tax cheats in corporate Australia? He hits them over the head with a feather — much to the chagrin of salary, wage and small business taxpayers. The ATO referred 437 cases from all segments to the Commonwealth Director of Public Prosecutions during 2006. However, only one of those was from the large business segment, despite the fact they are the biggest provider to the ATO’s compliance revenue well. The ATO refused to tell me the figures and it was only when a question on notice was provided to Assistant Treasurer Peter Dutton that I found the disturbing news how our tax administration works.
Mr Fitzgibbon asked the Minister for Revenue and Assistant Treasurer:
(1) How many cases did the Australian Taxation Office (ATO) refer to the Commonwealth Director of Public Prosecutions (DPP) in the 2005-06 financial year?
(2) How many large businesses did the ATO refer to the Commonwealth DPP for prosecution in the 2005-06 financial year?
Mr Dutton — The answer to the honourable member’s question is as follows:
D’Ascenzo should be asked why more big companies were not referred to the DPP. If he does not come up with a logical explanation, then he has failed Australian salary, wage and small business taxpayers and furthers the perception that this tax administration does favours for the big end of town. Many happy returns!