As the Australian Tax Office (ATO) prepares to launch actions against holders of secret Liechtenstein bank accounts, Australia's Assistant Treasurer Chris Bowen has said that he is open to the idea of 'naming and shaming' those who have evaded large sums of money in tax.
Bowen has suggested that the practice of publishing settlements made between those accused of evading taxes and the ATO may act as a deterrent to others considering playing fast and loose with the tax laws. "I can see the attraction of naming and shaming," he told ABC, adding: "it's something I'd be open to."
The Australian authorities have previously published tax dispute settlements, but the practice was discontinued in the mid-1980s as the prevailing opinion within the Tax Office was that naming and shaming acted as a disincentive for those with questionable tax affairs to come forward and settle disputes.
Such tactics are used by governments elsewhere in the world, for example in Ireland, where the Revenue Commissioners publishes a monthly 'defaulters list,' although the jury remains out on whether this actually encourages a greater spirit of tax compliance within the wider tax-paying community. Quite apart from the fact that naming and shaming may actually discourage openness in the tax system, Australia's opposition Treasury spokesperson, Julie Bishop, has also questioned why un-elected bureaucrats should make "arbitrary decisions" on whose private affairs should or should not be splashed over the newspapers.
The naming and shaming debate has resurfaced in Australia as the ATO prepares to launch investigations into a number of Australians with assets held in Liechtenstein's LGT Bank, the institution at the centre of tax scandal which started with the boss of Germany's Deutsche Post earlier this year but has subsequently spread worldwide.
Out of the AUD100mn that the tax office hopes to recover from the Liechtenstein account investigations, it is believed that so far it has only clawed back AUD4.5mn. With the new investigations, the ATO is targeting another AUD60mn in taxes that it thinks it is owed.
Australia, like many of its onshore counterparts such as the UK and US, has taken an increasingly dim view of offshore tax planning in recent years, and has an ongoing multi-agency programme to crackdown on offshore tax evasion under the banner of Project Wickenby.
Launched by the previous Liberal/National coalition government in the 2006/7 budget, Wickenby is set to receive a total of AUD300mn in funding over its seven-year lifespan. By August 2007, it had raised AUD50mn in back tax liabilities, including interest and penalties, and Peter Costello, the Australian Treasurer at the time, claimed that there had been an effective 70% increase in tax compliance by individuals and firms identified by Wickenby. Whether the operation raises enough in back taxes to cover its total costs remains to be seen.
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