Editorial - Yet another committee!

As at the end of February 2008 the newly elected Labor Government had commissioned at least 47 reviews, inquiries and committees since coming into office. The Tax Design Review Panel is an example of one such committee.  On 8 February 2008, the Assistant Treasurer and Minister for Competition Policy and Consumer Affairs, the Hon Chris Bowen MP, announced the appointment of a Tax Design Review Panel charged with examining how to reduce delays in the enactment of tax legislation and improve the quality of tax law changes.

The Panel will primarily be responsible for:

• options to reduce the delay between the announcement of proposed changes to tax laws and the introduction into Parliament of associated tax legislation;

• how the quality of the law can be improved through enhanced community consultation, particularly in the development of tax policy changes prior to the announcement of specific changes; and

• methods to increase community input into the prioritisation of changes to tax laws.

There are more than 60 unenacted tax measures which were announced by the previous government, mostly by press release, which have not made it into legislation. The average time since these measures were announced is over two years. Five measures were announced more than five years ago and 13 measures were announced between three and five years ago. Under the Howard Government we became accustomed to tax changes being announced by press release. Tax practitioners also became accustomed to trying to comply with proposed tax changes on the basis of the limited information contained in the press release. Where legislation follows quickly after the announcement of proposed changes, any uncertainty as to how the proposed changes are to work is minimised.

Unfortunately, the time delay between the press release and details in the form of legislation and explanatory memoranda is often too long, leaving taxpayers exposed. Policy by press release often creates uncertainty.

In recent years most tax measures have been introduced within 12 months of their announcement. On average, the time between announcement of changes and introduction of the legislation was around 8.5 months. For legislation enacted in 2006-07, the average time between the announcement of changes to the tax system and their introduction increased to 12 months.

Delays in the enactment of tax legislation are acceptable if caused by extensive consultation, particularly if this consultation results in an improvement in the quality of the tax law changes. Delays may also reflect the complexity of trying to bolt on more tax changes on tax legislation in need of complete overhaul. In the last seven years more than 6,000 pages of new legislation have been introduced, adding to the complexity of our tax system.

We can only hope that the new Tax Design Review Panel comes up with some worthwhile improvements to reduce uncertainty caused by delays in introducing new tax measures. One important first step for the committee is to recommend the new government provide a status report on all previously announced measures so that practitioners are aware of which of these is likely to see the light of day.

The panel is expected to report its findings by 30 April 2008.