Submission to Treasury - Designing a Tax System Advisory Board

18 March 2011

Ms Christine Barron
General Manager Tax Systems Division
The Treasury
Langton Crescent
PARKES ACT 2600
Email: tsab@treasury.gov.au

Dear Sir/Madam

Designing a Tax System Advisory Board

The Group of 100 (G100) is an organization of chief financial officers from Australia's largest business enterprises with the purpose of advancing Australia's financial competitiveness.

The G100 is pleased to provide comments on the Discussion Paper 'Designing a Tax System Advisory Board' and would welcome the opportunity to meet with the Minister (Assistant Treasurer) to discuss our concerns and views as outlined below.

The G100 made submissions to the Australian Future Tax System Review [AFTS] conducted by the Secretary of the Treasury - Ken Henry as Chair, that deal with the issues relating to the establishment of an advisory board. The submissions are dated 17 October 2008 and 12 May 2009. (Copies are attached for ease of reference).

The G100 welcomed the AFTS recommendation that a Tax Advisory Board be established and the evolution of the Tax Advisory Board concept.

The G100 is pleased with the acceptance of the notion that, whilst the Commissioner must remain independent from both non-government and political interference, there needs to be better accountability of the performance of the Commissioner and the ATO by having a Board that can provide oversight, advice and guidance to the ATO's performance. This would better inform Parliament through the Joint Committee Public Accounts and Audit (JCPAA) and other Parliamentary processes as to both the performance of the institution and suggestions for improvement.

At the time, the G100 understood that what was intended was to have a true advisory board that would report to Parliament on the performance of the ATO and the possible improvement to its performance in respect of those matters mentioned above, including the Board providing a direct and inbuilt voice for the business and taxpayer communities in relation to ATO governance and culture.

The G100 disagrees with the proposals for the following reasons:

The notion of an Advisory Board as proposed in the Discussion Paper is an emasculated concept with little or no teeth in being able to report to Parliament on the ATO's performance and that of its Chief Executive, the Commissioner of Taxation.
It is an Advisory Board that appears to be chaired by the Commissioner.
It is an Advisory Board that is anticipated to have only six members and it appears that quite a number of them will be quasi government members.
There appears to be no stipulated notion of a true advisory function and the proposals seem to bring together a number of committees that already exist within the ATO (such as the People Committee; the Audit Committee and the IT Committee) and rename them as an Advisory Board under the auspices and control of the Commissioner.
The proposals do not reflect the second leg of the Government's pre-election announcement providing for "a new, direct and inbuilt voice for business and taxpayer communities in relation to ATO decision making and culture".

The G100 has been a strong voice in advocating improved governance of the tax system. It has been widely accepted, including by the AFTS Review, that this governance requirement is an important attribute in developing and maintaining a world class 21st century regulator in that of the ATO.

Both the Henry Review and the Government's pre-election statement referred to the fact that other countries, including the US, have similar Boards. The notion that the US IRS Oversight Board entails is one consistent with our view but also one that does not usurp the power of the US Internal Revenue Commissioner to do his/her job properly. The Oversight Board's role is to evaluate the IRS's performance during the year; to describe the strategic challenges that it faces; and to provide a series of scorecards that measure its performance.

A short form release that announces the publication of the IRS Oversight Board's 2009 Annual report to Congress is also attached. This, in our view, illustrates how a similar Board, such as an ATO Advisory Board, could be sharing information with Parliament for the betterment of the Parliamentary scrutiny of the ATO as well as the betterment of the ATO itself.

The G100 believes that this is an appropriate model on which to base an ATO Advisory Board suitable for the Australian ATO and Parliamentary process.

The G100 recommends that an ATO Advisory Board should have the following key features:

Its role, structure and appointment processes will be set out in legislation and will function as an Advisory Board similar to a strategic private sector style Board and made up of non-government members.
ts key role will be to evaluate the ATO's performance during the year and to note where there have been failures and to make recommendations for improvements in respect of all the items that the Board considers relevant for the ATO's proper functioning - with the exception that it should not be involved in any specific taxpayer or taxpayer group, auditing, evaluation strategies or related processes.
An independent non-government chairman with significant private sector experience be the Chair of the Board.
The Board's role is to encompass both legs of the Government's pre-election announcement, ie including "providing a new direct and inbuilt voice for the business and taxpayer communities in relation to ATO decision making and culture".
The Board should have sufficient numbers, with a minimum of 9, to enable meaningful involvement of external non-government members to be appointed by the Government, in consultation with both business and taxpayer community groups.
An annual report be delivered to Parliament to be used by Parliament as part of its JCPAA and other Parliamentary processes into the review of the ATO.
The Board members be provided safeguards from prosecutions in the carrying out of their fiduciary duties with the exception, of course, of matters involving breaches of confidentiality or fraud or other vexatious behaviour.

Yours sincerely
Group of 100 Inc

Peter Lewis
National President