In the 2008-09 Budget Papers we find this sentence:
Increasing funding for compliance activities by the Australian Taxation Office, estimated to increase revenue by $2.0 billion over the forward estimates.
In the 2010-11 Budget Papers we find this sentence:
increasing funding to the Australian Taxation Office for GST compliance which is expected to increase revenue by $3.0 billion over the forward estimates.
In the 2012-13 Budget Papers we find this paragragh:
The Government is also increasing Australian Taxation Office (ATO) resources to undertake tax compliance activities through the following measures.
• Increasing cash receipts by $1,125 million over the four years to 2015-16 by providing $106 million over four years to the ATO to increase the ATO’s collections of outstanding taxation debts and superannuation guarantee charges. This has no impact in fiscal balance terms.
• Increasing cash receipts by $1076.1 million over the forward estimates, including a GST component of $554.1 million that will be paid to the States and Territories, by providing $195.3 million in 2014-15 and 2015-16 to continue a range of activities that promote voluntary GST compliance and provide a level playing field for Australian businesses.
• Increasing cash receipts by $210.1 million over the forward estimates period by providing $76.8 million over three years to the ATO and other Project Wickenby agencies to continue the Government’s fight against tax evasion, avoidance and related crimes.
So the ATO have been very successful at convincing the government to allocate more and more money to compliance and have promised all sorts of revenue as a consequence (to be fair Peter Costello fell for this stunt too). All well and good. After all the ATO is a bureaucracy and we know from the Public Choice literature that growing the size of the organisation and/or the budget would be an organisation objective.
In a few simple words on Wednesday, Treasurer Wayne Swan unveiled one of those gambles that make or break a government – Michael D’Ascenzo was stepping down as taxation commissioner. Changing the head of the Australian Tax Office is a major event in Australian politics that happens once a decade. But it was much more than this.
…
“Someone is pretty pissed off with the Tax Office,” one ATO official said, a comment that seemed to be reflected throughout the organisation.
…
The announcement came two days after Swan released the Mid-Year Economic and Fiscal Outlook which showed that forward revenue estimates had dropped $160 billion since 2008.Much of that reflected the continuing global financial malaise, with other tax revenue losses from concessions overseen by the government.
But there also appears to be a perception by government that the ATO has disappointed in some revenue areas – though Swan had nothing but praise for D’Ascenzo in announcing that his seven-year term would not be renewed.
It is unreasonable to blame the ATO for revenue forecast errors – the blame there belongs to Treasury – but given that the government has generously financed increased compliance activities and presumably not seen the actual increased revenue somebody had to take the fall.
As Crikey explained (emphasis added):
D’Ascenzo gratefully accepted the role of chair of the government’s cross-agency pursuit of rich tax cheats known as Operation Wickenby. In that role he presided over agencies such as the Australian Crime Commission and the Australian Federal Police. The $430.9 million investment by the government has struggled to gain success with only $351 million dollars collected by audit action. On top of that we have had allegations of Wickenby leaking the personal tax affairs of prominent Australians to the media, and the botched criminal investigation into Paul Hogan and John Cornell which cost taxpayers $30 million.
I have long argued that Wickenby is a waste of time and money.
On this reading of events it actually looks like Swan has made a good decision. I hope that is the case and Swan isn’t just replacing a Howard government appointee.
It’s a waste of time and money if the ATO is “discouraged” from pursuing certain individuals who have managed to mysteriously acquire wealth which could never have been amassed through legitimate endeavour.I’m thinking particularly of Politicians who entered Parliament as drunks and brokes but within a few short years were rolling in it and it wasn’t from their relatively modest and PAYE taxed salaries.
Lew
27 Oct 12 at 6:47 pm
The only good decision that clown could make is to resign his seat.
jupes
27 Oct 12 at 6:51 pm
Interesting definition of “investment”.
boy on a bike
27 Oct 12 at 7:51 pm
We have a local mayor today who declared decades ago, in a more innocent and honest time, that he had been a near bankrupt until he got onto our Council’s DA approval Committee.
It has tax implications, the ATO was not interested.
You gotta admire the Local Govt Rezoning Rort…..the only thing that comes close is an ETS if you’re Goldman Sachs.
Alfonso
27 Oct 12 at 7:58 pm
Blood from a stone is right.
The assumption that high net worth individuals are avoiding tax is a classic leftist perspective. They just don’t understand how it can be possible to make a lot of money legally when they are unable to do it themselves.
Mark Latham is well known for making this assumption when he was Opposition Leader.
The silly thing is, the seriously wealthy can afford the very best tax planning advice. The chances of them doing anything illegal is lower than it is for an ambitious Labor hack or union official.
DavidLeyonhjelm
27 Oct 12 at 10:47 pm
huh, reads like a typical tax dodge to this black duck.
Louis Hissink
27 Oct 12 at 10:47 pm
I think most average Australian were on the ATO’s side when they harrassed and harangued that filthy foreign toff Paul Hogan. I for one was really let down when he pulled their pants down and exposed them for being pin dicked losers.
Infidel Tiger
27 Oct 12 at 10:55 pm
With $350m collected by Wickenby but the operation costing $430m, plus a few incidentals, it looks like it has cost $100m or so in net terms.
However, most people would still say it was worth it, on equity grounds – with rich tax evaders now $350m less wealthy than the rest of us. Thankyou, Mr D’Ascenzo.
William Bragg
28 Oct 12 at 1:46 am
Re Paul Hogan – I noticed how much more “brave” they were in chasing him than they did Kerry Packer. Apparently it’s only unfair when they have less legal weight.
The Beer Whisperer
28 Oct 12 at 8:54 am
There is an argument that as a result of Wickenby & the new info sharing agreements, many billions have been repatriated to Australia by people suddenly worried about getting caught. But that might just be spin.
If you shake any taxpayer hard enough, something will fall out – not even those with the best tax planning will have managed to cross every I and dot every T as required by legislation and rulings & determinations. It is not possible to be 100% compliant. Fortunately the average tax officer investigating is likely to have even less idea about the details. And probably not care that much either.
But yeah, Treasury faked the revenue figures, not the ATO. ATO has pretty good projections of what is coming in. OTOH, D’Ascenzo has been out there marketing the ATO’s ability to come up with more money if it was given more money to spend, so I guess he had to wear that.
Tim
28 Oct 12 at 10:14 am
yes, I am one of the ones who provides it.
For the rest of the time, I defend rich taxpayers against the ATO.
The problem is thatmany wealthy people will back down and settle after 4 or 5 years of harrassment by the ATO. The ATO often cleverly finds a ‘liability’ of $100K to $200K which is not quite worth litigating and then stonewall until the taxpayer pays something for the ATO to go away.
Rococo Liberal
28 Oct 12 at 10:57 am
Sinc
When you say Wickenby cost $450 million, does that constitute legal costs? After all the tax officers working on the case would have been paid anyway, so it seems odd to attribute tthe cost of their labour to the figure.
Rococo Liberal
28 Oct 12 at 10:59 am
There was an Information Technology screw-up a few years ago where BAS statements were going out months late and even a basic phone call enquiry left you waiting for hours. As an IT professional I have great personal interest in studying project failures, but mostly the details don’t get published and every project is reported as a success, regardless of what really happened.
If you search on blogs and mailing lists there were comments suggesting that a lot of public servants inside the system were pissed about it. I have no proof that this issue was in any way related to D’Ascenzo, but it happened on his watch, or at least the visible problems happened on his watch — the project started a while back. Sometimes bad things happen to good people, but we all live with that.
Tel
28 Oct 12 at 8:36 pm
RL – that was the budget cost allocated to Wickenby. How they actually spent the money I don’t know.
Sinclair Davidson
28 Oct 12 at 8:38 pm
Should be clearer that was the additional budget allocation.
Sinclair Davidson
28 Oct 12 at 8:39 pm
They use the additional budget allocations to get around the efficiency dividend staff sacking they would otherwise have to do – so they cut the budget by 1.5% or whatever, and then receive an extra couple of % for special projects.
Tim
29 Oct 12 at 7:17 am