Saturday, March 14, 2009

There are some things Dr Henry can rule out

Such as "board" to oversee the work of the Tax Office

The head of the Henry Tax Review has killed one of the more extreme proposals to reign in the power of the Tax Office.

The so-called group of 100 large Australian companies headed by OneSteel chief financial officer Tony Reeves last month asked for a board of directors to oversee the work of the Office saying it would bring "all of the things you expect a public company board to bring to the management of a company.

Telling a tax conference in Sydney yesterday he was taking this suggestion as his "theme" Dr Henry said it misunderstood the role of the Office and the role of company boards...

"In large public companies, dispersed ownership means it is impractical for shareholders to be directly involved in management," he said.

"A board of directors is delegated the power to manage the company in shareholders’ interests. A critical feature of this governance arrangement is that the board has the power and responsibility to act, including the ability to appoint and remove the chief executive officer."

But he said in the case of the Tax Office, the ultimate owners were "the Australian community, whose interests are represented through the Parliament."

"This institution might be thought of as the ultimate board of directors," he said.

"Given the importance of the Commissioner’s role in the relationship between the executive and taxpayers, governments would properly be uncomfortable with delegating to anybody else their power to appoint and remove the Commissioner. It is not surprising that the boards that oversee other tax authorities do not have this power to directly appoint or dismiss the chief executive."

Dr Henry begins a 10 city roadshow Monday to hear public views about the tax Sydney. He will be in Melbourne and Geelong Monday and Tuesday week.