Wednesday, September 10, 2008

The lack of recourse to a higher authority

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The problem with paying tax as I see it is that you don't have recourse to a higher authority. There is a tax industry ombudsman but its not like you will get much assistance there over points of law. They can only address issues which relate to the application of the law, not the fairness of the law. The best you can do is register a complaint with your local MP. But I can promise you, unless there is a 100,000 people like you, they will not care a bit. Why should they? Why should they care if they have wronged one person or 1000?
This is the problem with a system which relies on arbitrary rules. The problem with arbitrary rules is that they defy principles of objective reality, which means that people can readily find ways around them. Its totally understandable that they cheat on tax because the system is arbitrary and unfair. They did not choose to participate, they were forced to. They did not design the system, it was thrust upon them.
The recourse of every cynic is to argue that you are wasting your time. The tax system is here to stay. I care to differ. A system that is contrary to the sanity and welfare of people is destined to fail. The people just need a system which is better than the existing mess. The problem is getting their attention. They are so cynical and disinterested in issues pertaining to government, which says something in itself.
The biggest problem with the tax system is the same problem with the general state of the public sector:
1. Lack of accountability: There is no forum, no venue, no recourse for people who want to challenge the effectiveness or execution of the Tax Code, whether on practical or ethical grounds.
2. Lack of efficiency: The government is very slow to address the problems in the system. This lack of accountability arises from the lack of incentives to be effective, responsive or efficient.
3. Lack of transparency: Its very difficult to get any information from the tax office on how your tax was actually calculated. If there is a discrepancy between your calculation and theirs, you dont get to know what it is beyond the over-simplified document they send out to you.
4. Lack of fairness: The Tax Code is a political document. There is little attempt to be fair or ethical. In fact ethics has deteriorated into an old-fashion tussle between political parties. Its weird but people just accept the right of the government to impose any tax it wants to. The Australian Labor Party did not announce any new tax prior to the election. It waited until a year after to spring that on the electorate. There is of course a tendency to make the Tax Code favourable to large corporations. The best way to do that is to make it as complicated as hell so you need a contingent of consultants to interpret the law.

The problem is of course arbitrary rule. The parliament has a right to impose any law it wants on the people with no regard for the interests of the people. Of course there is the expectation that they will be responsive to the people, but this has several weaknesses:
1. Self interest: Any issue that is contrary to their self interest is going to discourage them.
2. Minority: Any person, or small group of voters has little power or influence, and political decisions are made very slowly because you are just another interest group, and a not so powerful one.
3. Centralised power: Arbitrary power tends to be highly centralised power, because their is no principled framework for developing ideas, and perceptions are more important than facts. You have to test ideas rather than developing and supporting an argument.
4. Scheduled decisions: Governments tend to schedule political decisions around elections. this is a waste of time. The parliamentary system is likewise a waste of time, and does not encapsulate the opportunities to use modern technology to make better decisions.
5. Integrity: There is no integrity to decision making, little long term strategy, no philosophical structure. Parties will compromise to the extent that wins elections. Is that good? It was for Tasmania in the Telstra privatisation, but at whose expense?
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Andrew Sheldon www.sheldonthinks.com

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