Tuesday, March 31, 2009

The Tax Office is skint?

Australia's Tax Office is hurting in tough economic times, asking its staff to take leave, cutting recruitment and cutting short employment contracts.

Tax Commissioner Michael D'Ascenzo told a parliamentary hearing in Brisbane that his office was on track to overspend its budget by $80 million unless it took "tough decisions".

"In addressing our financial difficulties it is likely we will have to adjust service standards and revenue commitments," he said.

"We will of course need to mitigate this as much as possible bearing in mind how the global financial crisis is affecting taxpayers across Australia. We will continue to work with our clients to help them get through these difficult times."

The Commissioner said his own difficult times stemmed from delays in his computer modernisation program that meant he had to keep legacy systems operating for longer than he had expected, delaying savings...

At the same time the natural rate of staff attrition was slowing.

The Commissioner was encouraging staff to take annual leave, cutting spending on travel and consultants and terminating early some short-term contracts.

The global economic crisis would be "challenging" for taxpayers, tax professionals and the Tax Office.

"Our compliance strategies recognise that an economic downturn increases the risk of extreme non-compliant behaviour," the Commissioner said.

But continuing to collect the tax due was "critical" because of the implications of reduced compliance when the economy began to recover.

The government is under pressure to spend an extra $1 billion in the May budget extending the First Home Owners boost after home sales figures that appear to show it boosting home sales.

The Housing Industry Association says home sales jumped 3.9 per cent in February to be up 8 per cent since November.

"This is evidence that the tripling of the First Home Owners Grant is working in generating new home building activity and employment,” said HIA economist Harley Dale.

The extension of the grant from $7000 to $14000 and to $21000 for new homes is due to expire at the end of June.

New home sales in Victoria have out performed the nation in the last three months, falling 5.6 per cent in February after surging 24 per cent over November and December.

“This reinforces anecdotal evidence that the tripled First Home Owner’s Grant for new homes and additional state-based incentives have had an enormously positive impact in Victoria," said HIA executive Gil King.

“Victoria really took a ‘breather’ in sales in February, but over the three months to February, Victoria still had the strongest result of all the states,” said HIA Victorian Executive Director Gil King.