States & Territories tax legislation and tax administration and the Rule of Law. Who cares?

The Rule of Law

This is one attempt to diagrammatise the essential principles of the Rule of Law. Source: The Rule of Law Institute.

In January, the Queensland Treasurer, in answering the Question on Notice No. 1616 from the Honourable Tim Nicholls, Shadow Attorney General and Minister for Justice should have put shivers up the spines of those of us who require the Executive to comply with the Rule of Law.

It was a “She’ll be right mate! Trust us, we’re from the gov’ment!” answer. In DA00016.2, the Commissioner gave the Commissioner power to assess contrary to the Act, Parliament’s Act! What next? Expand the tax base, increase the rates?

So, if someone has to ask this “Who cares?” question, then there is something horribly wrong. Little by little, the line between Parliament’s function as the legislator and the revenue offices fades away. Your Executive Director has watched this over the more than 50 years he has been in practice. And when you think about it, it is so much easier to simply leave vital aspects of tax legislation and tax administration to the bureaucrats, default on the interpretation of legislation to the “policy” behind the relevant section, rely on retrospective legislation while taxpayers, practitioners and selfassessors are left to sort it out themselves, always working against a backdrop of penalties and client dissatisfaction. And so much more.

In passing, this passage from Trust Company Ltd. v. Chief Commissioner of State Revenue [2007] NSWCA 255 at [84] is spot on: “It can be misleading to speak of “the legislative intention” or “the purpose of Parliament”, although they are useful phrases if properly understood: see Mason, “The Intent of Legislation”, (2006) 27 Aust Bar Rev 253. The legislature may have a target, but the legislation must hit it. Assuming the purpose as submitted by the Chief Commissioner, the words of s 24 did not carry it into effect.” After all, the Executive can recommend to the Legislature in those cases that the Act be amended: see Commissioners for HM Revenue & Customs v. Mayes [2011] EWCA Civ 407at [20].

For example, the Queensland Office of Revenue is aware of deficiencies in many of the sections of the Duties Act, such as section 124, section 70. But “administrative adjustments” (to call them that) in the day to day operation of the Act to tweak the meaning or operation of a section to meet conveniently what the QRO wants the section to operate and sometimes “administrative arrangements” (which have been highlighted in The Tax Reformer) are called in aid to sweep the issue out of sight when there should be (sometimes) a full root and branch amendment of the section. Then there those euphemistically called “ex gratia payments”, done in secret. Is “secret’ too strong a word? Well, maybe, but why is there not a Register of Ex gratia Payments with a short statement of the facts (suitably redacted to preserve confidentiality) available so that all taxpayers, partitioners, and self-assessors know about them resulting in a level playing field. More on ex gratia payments later in the TTR.

So much has been written about the Rule of Law, one wonders why it has to be mentioned again and again. The short answer is to preserve constitutional democracy. References here include “The Rule of Law: Foundation of Constitutional Democracy”, Emeritus Professor Geoffrey de Q Walker, MUP 1988, “The Tax Wilderness: How to Restore the Rule of Law”, Emeritus Professor Geoffrey de Q Walker, The Centre for Independent Studies 2004, Courts and the Rule of Law, Murray Gleeson CJ (as he then was), Melbourne University, 2001; and The Rule of Law Association.

In the later article, there is a list. Consider that list against perceived tax legislation and tax administration issues about the Rule of Law in each of the States & Territories!

More on the Rule of Law in further Issues of the TTR.