The ACT government's problems with tax compliance and with unpaid fines and penalty notices are, on the face of it, unexceptional. Governments the world over contend daily with individuals or corporate entities delaying, sidestepping or avoiding altogether their tax and legal responsibilities. Most public administrations try to strike a reasonable balance between voluntary compliance on the one hand and measures intended to deter recalcitrants on the other – and if one or other aspect of this equation should prove sub-optimal, to make adjustments.
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The Barr government is going to invest $5.7 million over the next four years hiring investigators and setting up a new specialist team in the Treasury Directorate to crack down on those using "sophisticated arrangements" to avoiding their tax obligations. It's also reportedly considering stronger measures to reduce the incidence of non-payment of fine and penalties.
The Labor government has been confronted with revenue shortfalls caused by non-payment of fines and taxes before – and with queries as to how this came about. In 2012, then shadow attorney-general Vicki Dunn claimed $3.3 million in unpaid fines imposed by the ACT's courts indicated a lackadaisical approach to recovery at odds with the courts' powers to collect outstanding fines. A year later, a report by the ACT Auditor-General highlighted the under-collection of unpaid parking fines as a major deficiency in the performance of ACT Parking Operations. It did not suggest misconduct or neglect; rather that government (and bureaucratic managers) regarded parking operations as an unglamorous, pedestrian affair, able to be ridden with the reins dropped.
In 2014, the ACT's tax chief began identifying investment properties as being in arrears on rates and land taxes, apparently signalling a more robust approach. At the same time, Chief Minister Andrew Barr indicated the government, having hired more revenue compliance and liaison officers, would be doing all it could to crack down on non-payment of taxes.
The hiring of yet more investigators two years on suggests an underappreciation of the difficulty of reducing tax evasion. What of the impediments to collecting more unpaid fines? Not much, apart from ineffectual bureaucratic coordination and liaison and a lack of overarching debt recovery objectives underlined by the lack of a dedicated office within Treasury such as exists in NSW. Measures of last resort, such as the issue of infringement warrants, seizure of personal property, or even arrest and imprisonment exist but are little used, apparently because these require the involvement of the courts, always a costly undertaking.
Fines and taxes are two sides of the same revenue coin, and failure to deal appropriately with obstinate or rebellious payers undermines the notion of a collective obligation to financing the provision of government services. A lack of follow-through in ensuring individuals or business entities pay the penalties lawfully imposed on them sends a terrible message, and undermining the notion of these penalties acting as a deterrent or punishment. Given the ACT government's financial challenges, a tougher all-round approach is warranted.
