For months, we’ve been hearing about “robotax” from the media, the Greens and other crossbenchers: the Australian Tax Office has been automatically raising old tax debts of individuals and small business taxpayers and offsetting them from tax refunds or alerting taxpayers about the need to repay the debt. The Greens and Guardian Australia, which has led the coverage, quickly labelled it “robotax” (initially in quotes, now without) in an effort to link it with the infamy of robodebt.
It’s nonsense: there is no “robotax”. The comparisons to robodebt are offensive, and the ATO is not merely doing its job but doing what the law requires it to do. It’s a case study of how the media and politicians can distort and misrepresent policy in a way that damages the interests of the community.
The issue arose a couple of years ago when the auditor-general found that the ATO had changed the way it handled old tax debts:
Prior to January 2020, the ATO’s automated system managed the offset of credits owing to taxpayers against debts considered to be uneconomical to pursue (‘non-pursued debts’). The system process was referred to as a ‘re-raise’. If a taxpayer became entitled to a credit the nonpursued debt would be re-raised on the system and the credit offset against it. The ATO also has established, through policies and pre-determined system-based rules, exclusionary criteria to prevent certain non-pursued debts from being re-raised.
In short, if you owed the ATO a small debt, they didn’t waste more taxpayer money than it was worth to try and collect it. It was put on hold, but if you ended up being owed money down the track, the ATO took it out of your refund. Simple, practical, efficient. The system ensured that if you owed money, you didn’t get a handout from the government in the form of a full refund.
But the ATO had paused its re-raising process in 2020. The Australian National Audit Office (ANAO)’s problem with that was that it was unlawful: the ATO can’t just waive debts. The auditor-general suggested to the ATO that it “ensure full law conformance with the legal requirements of the Taxation Administration Act 1953“.
This was only a minor recommendation by the ANAO but important nonetheless. It was the Auditor-General telling the ATO that it needed to resume its method of collecting debts that were too small to pursue by docking them from refunds, or decide that it was going to waive them — in which case it needed to apply to the finance minister, as the law required. The ATO — which, as Guardian Australia had to admit, separately obtained legal advice telling it that it had to pursue the debts — resumed its re-raising process and began contacting people who owed money.
There is no comparison with robodebt, which was about a deeply flawed and unlawful method of estimating overpaid welfare payments, dreamt up by bureaucrats and ministers who engaged in misleading conduct, and hounding people to pay up, in the end leading to suicides and deep misery on the part of many of the victims of fake debts. In this case, these are verified, existing, unpaid tax debts that will be taken from tax refunds. The comparison isn’t just wrong; it’s offensive to the tens of thousands of victims of robodebt.
That hasn’t stopped the Greens — who have repeatedly suggested, without evidence, that the ATO is pursuing “questionable debts” that people “may not even owe” — and Guardian Australia chanting “robotax” non-stop, with other media outlets such as the ABC picking up on the robodebt comparison. Outlets rushed to find the worst possible cases of people not being aware of debts, confusing people’s poor understanding of their financial situation with the ATO’s attempt to recover debts.
Eventually the ATO succumbed to pressure about its recovery program: in November it stopped contacting people about the debts, and then in February it paused the program altogether in relation to debts more than seven years old while it conducted a review. But the fact remains that it has no discretion to waive debts.
What the Greens and the media have been pressuring the ATO to do is to act unlawfully, and allow some small businesses and individuals to not pay the full amount of their taxes — while the rest of us have to pay full freight. Since when do the Greens and the media champion people who avoid paying their tax? They seem to be espousing a policy whereby if you simply refuse to pay the ATO long enough, you’ll have your tax debt waived, because you’re a retiree, or you “didn’t know”, or you thought it had been waived (or you’re a small business, and we must all worship at the altar of small business).
A strange position indeed for politicians and media outlets that advocate equity and lots of government spending.
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