Do something about tax concessions - 1996 COA

As I mentioned, the last national Commission of Audit was instigated by the Howard gov in 1996. It had very similar findings of course to today's commonwealth Commission of Audit. However with one exception? Perhaps it's too early yet as this latest audit is so large it will take time to be read through and analysed properly? The last COA took aim fair and square at tax concessions and said they should be incorporated into the federal budget.

What? You mean they're not? I smell a rat..... Anyway it doesn't take much to wonder then if this present COA recommends the same thing. I've heard nothing in the media about that.

So why aren't the like of Rinehart having their tax concessions chopped then? There was plenty of time to sort that out. This was the recommendation in 1996. I think now tax concessions are considered "outside the terms of reference" for the current COA. How much of a fixed bloody audit is this?

One area where current budget reporting is clearly inadequate is the cost of tax concessions (that is tax expenditures). Treasury noted that a forthcoming OECD publication shows that Australian reporting of tax expenditures currently falls short of overseas best practice. 

The different budgetary processes that apply to tax concessions and expenditure programs in Australia have contributed to the lack of transparency of tax expenditure reporting. 

First, spending on tax concessions is not monitored to the same extent as spending on programs. Treasury noted in its submission to the Commission that it can be three years before a tax expenditure is fully costed. 

Second, consideration of tax concession proposals is hampered by the general difficulty of accurately costing them. This difficulty stems in part from the lack of resources devoted to monitoring tax concessions compared with those devoted to monitoring programs, and the consequent insufficient level of information about tax expenditures. 

Third, unlike tax concessions, control of program expenditure is enhanced by individual Ministers being held responsible for spending by their portfolio. 

Finally, established procedures exist for the Department of Finance and the responsible portfolio to examine ways of containing blowouts in program expenditure but not blowouts in tax concessions. 

As a result of all these factors, tax concessions are a largely non-transparent form of assistance. This lack of transparency makes less visible the effect of tax concessions on the budget and reduces accountability. It also increases the likelihood that poorly targeted concessions will remain on offer. 

This lack of transparency is also inconsistent with the Charter of Budget Honesty's objectives to ensure greater transparency for the decisions and operations of government. 

Treasury's submission to the Commission also noted that 'lack of transparency and minimal accountability for tax concessions have made them a popular vehicle for those seeking government assistance'.

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Recommendation 11.19: Treatment of tax expenditures 

Tax expenditures should be treated as much as possible like program expenditures in all published fiscal reports and statements and in all budgetary processes. more