Monday, March 16, 2009

A Secretary's lament - what's it like for ordinary Australians?

"We are genuinely interested in these views - not only the views of those who are highly sophisticated in tax matters, we can get their views any time."

TREASURY head Ken Henry believes many Australians find the tax system "too big for them to cope with" and fears he is not getting the full picture in the submissions to his tax review.

Speaking to The Age ahead of a two-week roadshow of "town hall" style public meetings, Dr Ken Henry said most of the hundreds of submissions he had received came from people or groups concerned with policy issues.

"They don't often talk to you about how the system in its entirety affects them, how they feel about it," he says.

"I mean obviously some people do, some people write in in rather colorful language and tell you what they think of the system, but with those people, it would be good to sit down with them and just go through what it is, what features are there in the existing system that's really bugging them?"

Does he want to find out how the tax system people psychologically?

"Absolutely. I think people understand that the country needs tax revenue in order to fund government services. But it is clear that the present system in its complexity - not just the design elements, but also the way in which it is administered - it is clear that for for some people it is just too big for them to cope with"...

"We are genuinely interested in these views, not only the views of those who are highly sophisticated in tax matters - we can get their views any time."

The first of ten 2-hour public meetings gets underway tonight at the Brisbane Town Hall.

Dr Henry isn't sure how he will draw people out. "I don't know, I just don't know," he concedes.

Part of it will be keeping TV and press cameras out. "We don't want to intimidate people. But I don't have any particular tricks up my sleeve."

Dr Henry plans to speak very briefly at the start and then hand over to a facilitator who will ask people how they think about a range of topics including personal income tax, the workings of family and other benefits, and business taxes - particularly those applying to small business.

"In a group where discussions gets going I am hoping people will feel that they really do have something to contribute. It might just be an anecdote that really illustrates the point that somebody else is making - that can be quite valuable."

The Treasury Secretary became convinced he wouldn't get the full truth from experts when by chance he met "Jim" in a central Queensland pub mid last year while returning from holidays.

"It was quite striking," he recounted to The Age yesterday. "Jim had an insightful perspective for somebody who professed not to understand the system at all. He didn't have a terribly sophisticated understanding of the system as a system designer would think about it, or even an administrator, but he had a very good sense of how the system affected him and people like him. That's the perspective that we just don't get very often."

Dr Henry says the town hall meetings will bring risks. The points made at each one will be summarised and put on the review's website, in order to encourage more submissions. "Some the propositions may be put in a challenging manner, but I don't think that risk is so big that we shouldn't take it."

The roadshow comes to Melbourne and Geelong next Monday and Tuesday. People unable to attend are invited to complete a questionnaire that will be on the review's website from today.


mshaw2001 said...

I take my hat off to Ken Henry. It looks like a genuine effort to tackle an impossible task. I lived overseas for a number of years and experienced a tax system so simple that the tax return could fit on an A4 page and be completed in ten minutes.

Maybe it wouldn't work here, but people didn't organise their behaviours and expenditure around the tax system to anywhere near the extent they do in Australia.

For example, tax rates on income were lower but you generally couldn't claim any deductions. I fear deductions are a prime opportunity for low level cheating by people who consider themselves honest people (see the work of behavioral economist Dan Ariely on cheating).

1jasonoz said...

Its not just ordinary Australians whom find it to big to cope with; why do you thin companies employee their mountains of accountants, financial wizards external assistance to hekp with understanding the 6000+ plus pages of just the income tax laws!

mshaw2001 said...

Maybe the Tax system is a kind of luxury of inefficiency and complexity we can afford because as a nation we can rely on resources to pay our bills. There is a touch of Saudi Arabia in Australia at times.

KitchenSlut said...$pd20090316-Q7736?OpenDocument&src=sph

Article today in Business Spectator may be of interest on the imputation credits issue being reviewed by Henry. The alternative argument to Nick Gruen?

1jasonoz said...

Broaden the tax base, reduce the distortions present and use the savings lower the rates!

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