At an address to a Tax Institute forum in Sydney on Fri 18.5.2012, the Assistant Treasurer commented on concerns about proposed changes top Pt IVA and also on retrospective tax changes.
Mr Bradbury said he was aware that some people in the tax community had questioned the need for the proposed Pt IVA changes and that some had criticised the Government for announcing the changes without consultation. He said the Government did conduct targeted consultation before the announcement, including with representatives from the Tax Institute. [But no credible consultation…?]
The Assistant Treasurer also said he “completely reject[ed] the notion that consultation is not genuine just because those consulted have not received the response from Government they were hoping for”. [Yes, …]
Having consulted and made the policy decision [after little or no consultation…], he said the Government was clear from the outset that it would consult further on how to implement the policy without unintended consequences [but not so as to abandon the decision to change something…].
Mr Bradbury said the Government would also seek advice from senior tax Barristers with expertise on Pt IVA before consulting publicly on draft legislation. [Listen to them if they say to change nothing…] He noted the roundtable looking at Pt IVA met for the first time on Wednesday 16 May 2012 and he was told that “there was a constructive discussion of how to design these changes”.
Responding to concerns about retrospective legislation, the Assistant Treasurer said he defined retrospective rules “as those having effect prior to their announcement”. [David, your predecessor: Chris Bowen appointed the ‘Tax Design Review Panel’ in 2008, and we defined retrospective legislation as any Act that has effect prior to its passage – including simply back to the date of the announcement, and a principal focus of our recommendations was to limit the use of this harmful expedient, and in the remaining times when the expedient couldn’t be avoided, to get the quality and detail of announcement up by confidential private sector consultation prior to the announcement.]
Mr Bradbury said there are circumstances where [his sort of] retrospective legislation is justified [but they are very rare]. He said retrospective tax legislation is generally only sought where [some-one who is not the Parliament, puts it to a different Parliament that] the law is operating in a manner inconsistent with the [previous] Parliament’s intention (this includes but is not limited to examples of egregious tax avoidance and evasion) and there is a risk of significant revenue loss.
He said where the dividing line on these matters should be drawn can be open to debate and contention, but in his view, it was “far too simplistic to argue that beneficial retrospective changes are ‘good’ and adverse retrospective changes are ‘bad'”.
Source: Assistant Treasurer’s address to the Tax Institute NSW 5th Annual Tax Forum, 18 May 2012.
[David, you are the Minister now. Be man enough to reverse the decision to change Part IVA, if that does appear the better course of action. Don’t hide behind the decision of a previous Minister.]
[LTN 95, 18/5]