What an apt analogy

A story about the ATO and a so-called tax gap caught my eye this morning:

The Australian Taxation Office is confident it can squeeze more out of corporate Australia, narrowing a gap of about 6 per cent — or $2.5 billion — between the amount of tax the big end of town should pay and the amount it ­actually contributes.

In a study of the corporate tax gap released today, the ATO estimates underpayments between the 2008-09 financial year and the 2014-15 financial year total $17.8bn, for an average of 5.8 per cent.

That is itself not interesting – the ATO is a bureaucracy and has all the perverse incentives that all bureaucracies face. So they have to promise more and more and more to maintain or grow their own budget.

Rather I found this very interesting:

He said gap measuring forced the ATO to ask itself: “How much are we not collecting and why?”

This was different to the traditional approach of asking how efficient the ATO was at collecting money — “how many audit results you got for per dollar you spent”.

“An analogy is if you had WADA (the World Anti-Doping Agency) at the Olympics being rewarded on how many drug cheats they catch, not how clean the Olympics are,” Mr Hirschhorn said. “They’re slightly but importantly different questions. In fact, what people, whether spectators or clean participants, are interested in is a clean Olympics, not how many drug cheats are caught.

Hmmmmm – the ATO should behave like WADA. We here at the Cat have closely observed WADA in action over the past few years. When you can’t get your way in Australian courts, you change the rules, you reverse the onus of proof, you enforce self-incrimination, you engage in double jeopardy, you prosecute people in a foreign language. Do we really want the Australian tax system run like the Salem witch trials? You’re not guilty of tax evasion if you can recite the Lord’s prayer, backwards, and in Latin.

 Reading the article is quite astonishing – the ATO has one job; collect the tax revenue that has been authorised for collection by the Parliament.  Maximising tax revenue collected is not their job, and cannot be their job.

He said the gap estimate was “based on hard, granular data”.

If that was the case, it should have been collected already.

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43 Responses to What an apt analogy

  1. Sinclair Davidson

    No – two and one half billion.

  2. MACK

    “If that was the case, it should have been collected already.”
    So they are just admitting they are incompetent. Or is this just a plea for more resources?

  3. mizaris

    fvcking bureaucrats…just do the job you’re there for and stop inventing more reasons to enlarge your fiefdoms. I HATE THE ATO WITH ALL MY LIFE.

  4. Infidel Tiger 2.0 (Premium Content Subscribers Only)

    If they are punishing corporates – good.

    Of course the best way to maximize tax revenue is if the top brass at the ATO kept an eye on their own families.

  5. stackja

    Sinclair Davidson
    #2520463, posted on October 11, 2017 at 4:00 pm
    No – two and one half billion.

    URL didn’t have a decimal point. Any way what’s a billion here and there.

    Everett Dirksen Misattributed: A billion here, a billion there, pretty soon, you’re talking real money.
    “Oh, I never said that. A newspaper fella misquoted me once, and I thought it sounded so good that I never bothered to deny it.”

  6. Rococo Liberal

    I deal with the ATO every day. They often get te amount of tax owed by a txpayer wrong. So why should we believe that they know how much tax has been underpaid by corporate taxpayers. And as Sinc says, if they do know then why aren’t they collecting this tax?

  7. Roger

    “An analogy is if you had WADA (the World Anti-Doping Agency) at the Olympics being rewarded on how many drug cheats they catch, not how clean the Olympics are,” Mr Hirschhorn said.

    Or police being commended for the number of arrests they make instead of for how safe the streets are.

    Oh, wait…

  8. Mak Siccar

    Prof Sinc. Your last sentence says it all.

  9. EvilElvis

    Heres a way to get back more than 2.5 billion, cut the arse out of the public service! ATO included, fuck these parasites.

  10. Chris Langan-Fox

    “No man in the country is under the smallest obligation, moral or other, so to arrange his legal relations to his business or property as to enable the Inland Revenue to put the largest possible shovel in his stores. The Inland Revenue is not slow, and quite rightly, to take every advantage which is open to it under the Taxing Statutes for the purposes of depleting the taxpayer’s pocket. And the taxpayer is in like manner entitled to be astute to prevent, so far as he honestly can, the depletion of his means by the Inland Revenue”
    James Avon Clyde, Lord Clyde KC DL (1863 – 1944)
    Lord Justice General and Lord President of the Court of Session from 1920 to 1935

  11. Siltstone

    a magnificent quote from Lord Clyde

  12. vr

    Sinc — I might have some data on this soon.

  13. Snoopy

    Dusallow tax deductions for donations to charities. The companies will still pony up.

  14. Dr Fred Lenin

    So in modern economic theory .no one looks at expenditure , \but concentrates on revenue ? In other words concentrate on increasing your salary , don’t worry about what you spend- ? A very flawed concept of reality don’t you think? Its no wonder we are an economic mess reality is a forgotten concept .

  15. OldOzzie

    Tax bills to surge for the middle-class: PBO

    Australia’s middle classes – already battered by rising energy costs and debt burdens – will be heavily hit by the Senate’s failure to wrestle control of spending, with around 1.6 million taxpayers confronting surging tax bills in the next four years.

    With both sides of politics locked into reversing the nation’s entrenched budget deficits primarily by collecting a growing share of income taxes, research by the independent Parliamentary Budget Office underscores the growing political temptation for Canberra to slug the nation’s top 20 per cent of income earners more heavily.

    The research confirms the Howard-era tax cuts have been almost completely wiped out for almost 80 per cent of taxpayers, with the top 40 per cent now paying almost 3 percentage points more than when the Coalition lost office in 2007.

    “Let’s not be surprised by this. If you’re not doing something about spending, it has to be taxes,” said Deloitte Access Economics budget expert Chris Richardson.

  16. Damienski

    I’ve just got off the phone from these clowns. ABN wrote to us about a superfluous ABN issued to an incorporated community association. I’m the President. I rang the number on the letter, waited for about 5 minutes and spoke to R at the ATO.

    Me: Can I cancel this ABN? It’s not active. The other ABN is active.
    R: You’re not listed as the Public Officer for this ABN.
    Me: Who is?
    R: Can’t tell you. It’s confidential.
    Me: Is it Joe Blow? If so, he died about ten years ago.
    R: Can’t tell you. It’s confidential.
    Me: Look up our active ABN. I’m the Public Officer. Same organisation.
    R: Yes – I see you are – but that’s only for that ABN. You’ll have to write to us and quote your personal Tax File Number to get yourself listed as the Public Officer on the superfluous ABN so you can cancel the superfluous ABN.
    Me: Have you ever heard of Franz Kafka?
    R: No.
    Me: Good afternoon and thanks for your help. Look up Franz Kafka. Click.

  17. Rabz

    If you think they’re bad now, just wait until Teats Peanuthead and Ratface Bowen let the malicious corrupt incompetents at the ATO off the leash – and gift them a whole new raft of big juicy taxes to enforce collection thereof.

  18. Rohan

    How about privatisation of the ATO. They currently Hoover $3.5 billion and employ a staggering 20,400-ish staff. That’s one bureaucrat per 250-300 (net) taxpayers.

    So there’s about a billion saved right there and they will likely be more efficient at collecting taxes. Let’s say the privatised service achieves collecting $1.5 billion. There’s your $2.5 billion. And a bit of the swamp drained.

  19. hzhousewife

    Damienski, perfect example of how things are set up to keep people in work. Think how satisfied that person is at the end of their day, fielding phone calls like yours over and over. Better than being on the dole, where you have to actually find yourself enough to do all day to stop going stark raving mad. Expensive for the rest of us, but essential for public order, apparently.

  20. Jock

    Is it my imagination or is the ATO just making this up as they go along? Why did the committe not ask for the metrics and assumptions so it could be checked through the PBO or someone independant??

    Sorry why would a pollie of any side other than One Nation , the conservatives and Lib Dems ask the latter querstion. They just want loot.

  21. Zulu Kilo Two Alpha

    I’ve just got off the phone from these clowns.

    Applying to the ATO a few years ago to offset my off farm income, against the loss made by the farm.

    ATO officer – “Your farm made a loss last year.”

    Me “After the worst drought in nearly a hundred years? I don’t think many farms in the Eastern Wheatbelt made a profit.”

    ATO Officer “So, when does your business plan show your farm returning to profit?”

    Me “When the drought breaks. When it rains.”

    ATO officer “Oh. So what’s rain got to do with farming?”

  22. EvilElvis

    hzhousewife hits it on the head and it’s the PS in general, not just the ATO, that is loaded with useless, overpaid, work for the dole positions.

    Fuck them off to the dole queues to ease the burden on us poor net taxpayers.

  23. mareeS

    How about the ATO goes after the free-range moneymaking entities known as unions? They own all sorts of enterprises and properties, and are barely accountable to wider Australia, pretty much like the mafia.

  24. Tom

    Maximising tax revenue collected is not their job, and cannot be their job.

    Yet any ATO official who comes out as a Big Government evangelist, like Jeremy Hirshhorn (quoted above), is as safe as houses. Trumble is a Big Government, anti-business socialist. Peanut Head and the Liars are Big Government, anti-business socialists — backed by the thuggery, corruption and intimidation of the union industrial complex, whose influence is maintained, in spite of union membership falling off a cliff (9.3% of private-sector employees), because it has seized control of the superannuation industry.

    Government in this country is out of control — and has been so for a decade in which revenues have more than DOUBLED. Every market is now distorted by major government interventions. Business is now forced to adopt the ruling class’s political causes, like SSM, to try to win favours from the elite.

    It’s difficult to imagine a more corrupt country — all driven by Big Government’s gargantuan appetite for other people’s money.

  25. stackja

    Gough Whitlam corrupted the PS.

  26. Tel

    When you can’t get your way in Australian courts, you change the rules, you reverse the onus of proof, you enforce self-incrimination, you engage in double jeopardy, you prosecute people in a foreign language.

    When you put it like that, it does seem a bit similar to the way the ATO operates. The whole concept of BAS statements and tax returns is the idea that all citizens need to constantly prove themselves innocent and saying nothing is equivalent to admitting guilt.

    Do we really want the Australian tax system run like the Salem witch trials?

    Well when you see something strange that doesn’t make sense, there’s always SOMEONE who wants it that way, else it wouldn’t be that way. The only question to ask is who benefits from the current system?

  27. Dianeh

    Maree has it right.

    Tax the unions and while they are at it, change the law so the unions are treated as corporations.

    It would be worth it for the entertainment value alone.

  28. stackja

    Jul 4, 2017 – Australian Taxation Office Commissioner Chris Jordan defends himself in stoush with Crocodile Dundee star Paul Hogan. … AUSTRALIA’S tax chief has defended himself amid an ongoing stoush with Crocodile Dundee star Paul Hogan, who called him a “boofhead” and a “mongrel”.

    May 30, 2017 – Paul Hogan claims boss of ATO is ‘boofhead’ over evasion claims. Paul Hogan has a new one liner to describe the bosses of the tax office: “boofhead”.

  29. stackja

    Dianeh
    #2521001, posted on October 12, 2017 at 7:03 am
    Maree has it right.

    Tax the unions and while they are at it, change the law so the unions are treated as corporations.

    It would be worth it for the entertainment value alone.

    TURC showed them up.

  30. Terry

    ATO: It is all of our money.

    Please show cause why we should allow you to keep some of what you collected on our behalf….eh, comrade.

  31. Alex Davidson

    Why would anyone be surprised that the ATO, endowed with unbridled power and charged with stealing, isn’t behaving itself?

    Instead of letting ourselves get distracted with stories about methods and process, we should be unrelenting in pointing out that calling theft “taxation” does not make it right; that dressing in suits and issuing declarations does not entitle any group to other people’s money; and that a fair society is one based upon respect for property rights, contract, and consent, not “might is right”.

  32. mh

    Labor gets inquiry into government tech wrecks after Senate backing

    …Then in December the government was facing another embarrassing technology failure, with the Australian Taxation Office’s systems suffering an outage that lasted multiple days and sparked fears of mass data losses.

    Since then the ATO has continued to suffer from intermittent outages, again some lasting for multiple days. A review of the December incident delivered in April found problems with the ATO’s Hewlett Packard Enterprise 3Par storage area network and the organisation has since reached a confidential settlement with HPE.

  33. Sinclair Davidson

    They currently Hoover $3.5 billion and employ a staggering 20,400-ish staff. That’s one bureaucrat per 250-300 (net) taxpayers.

    To be fair their budget isn’t $3.5 billion. A lot of that is funds that they administer for other programs.

  34. Empire

    because it has seized control of the superannuation industry.

    False claim, Tom.

    OrganizedSlime® was gifted control of super by the effete pig farmer. They seized nothing.

  35. You have to love the SMH reporting:

    “This is the first time the agency has ever put specific dollar values on the tap gap,” Getting into the plumbing business.

    “the ATO has opted to cut deals with big business rather than had to court.”

    “Multinational Ant-Avoidance Laws” – avoid them?…I for one welcome our new insect overlords!!!

    “But the HMRC 214-15 tax gaps figures of £36bn” – Feel free to look up Roman monetary policy as it applied to England in 214-15.

  36. Anto

    “An analogy is if you had WADA (the World Anti-Doping Agency) at the Olympics being rewarded on how many drug cheats they catch, not how clean the Olympics are,” Mr Hirschhorn said. “They’re slightly but importantly different questions. In fact, what people, whether spectators or clean participants, are interested in is a clean Olympics, not how many drug cheats are caught.

    Yes, there is indeed a slightly different, but important distinction. If you are not incentivized to catch drug cheats, but instead are rewarded for conducting a “clean” Olympics, then clearly the incentive is to not catch any drug cheats, regardless of how many of them actually compete. Hey, presto – clean Olympics!

    Mind you, he didn’t have his thinking cap on, when coming up with his analogy, because the question he wants ATO officers to ask was:

    “How much are we not collecting and why?”

    Surely, the better Olympics analogy would be, “How many drug cheats are getting away with it, and why?”

  37. mundi

    I was at a training course recently and for some bizarre reason there were ATO ‘business analysts’ there. They explained that their job was to advise management over how much tax would be raised by certain tax changes. I didn’t think that was the ATO’s responsibility, but there you ago. ATO dictates to government the terms on which tax should be collected.

  38. mh

    I was at a training course recently and for some bizarre reason there were ATO ‘business analysts’ there.

    ATO sites are full of business analyst employees. Drinking coffee.

  39. Tel

    ATO dictates to government the terms on which tax should be collected.

    You can hardly expect the government to figure that out for themselves.

    I like the name “business analyst” which implies there’s some sort of business underway. I guess the Mafia also see themselves as “doing the business” so makes sense that all standover rackets would use that as a benchmark.

  40. RobK

    Tel,
    That’s it in a nut she’ll.

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