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.
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.