Principle outweighs practicality in the control of tax

As a matter of principle, Parliament should be very reluctant to delegate its powers on any matter of importance.

According to the Taxpayers Union, a watchdog group, new laws have been proposed that would allow the government of the day to change tax rules by Orders in Council, a form of legislative instrument that do not require the specific approval of Parliament.

The effect would be allowing some aspects of tax law to be amended by decree, rather than by Act of Parliament. That would be highly problematic.

Compared to many countries, our system of taxation is a model of elegance. When it comes to ease of compliance, we are the envy of the world.

But this is really only true in a relative sense. In an absolute sense, the details are far beyond the understanding of ordinary people. If you don’t believe me, just try reading the Income Tax Act 2007. If you read sections A 1 and section ZA 6 (to say nothing of Schedules 1 to 52) and retain more than five percent of the content, I will eat my hat.

I once downloaded the Income Tax Act and attempted to run a word count on it. My computer crashed.

And there is probably no other way it could ever be. If you tax different levels of income at different rates, and allow businesses to deduct some expenses, there will be opportunities to exploit the system. That means the system has to constantly evolve to protect the revenue base. That, in turn, means more complexity as time goes on.

So you can see why, when it comes to the administration of such a system, there might be some appeal in bypassing Parliament when it comes to fine tuning the law. For one thing, the process of amending a statute through Parliament is more complex and time-consuming than the process for changing a regulation by Order in Council.

Furthermore, few members of Parliament have any special expertise when it comes to tax law. In fact, the trend towards fewer MPS having significant career experience outside paid government jobs means that many of them will have hardly any experience dealing with the tax system at all.

There are no such statistics for such things, but I would be willing to bet that the number of MPS who have had to file a GST return or write out a cheque for provisional tax is at an all-time low.

Considering all this, it is not unreasonable to question what meaningful contribution Parliament makes to the niceties of tax law anyway. Would it not be better to leave this to the Minister of Revenue who, in addition to being a member of a democratically elected government, can also act swiftly on the expert advice he receives from his department?

From an efficiency perspective – almost certainly. From a theory of government perspective – it’s a bad idea. It flies in the face of philosopher John Locke’s admonition that Parliament’s power is ‘‘…only to make Laws, and not to make Legislators…’’, meaning that the people delegate lawmaking authority to MPS so they will exercise that power on the people’s behalf, not so they can fob it off to other people.

Of course, as a matter of expedience, we bend that principle every day. Parliament delegates the minutiae of many statutory schemes to ministers by empowering them to make regulations.

There is no reason, for example, for why Parliament needs to involve itself in the decision about the font that should be used in a notice to renew a trade mark.

But as a matter of principle, Parliament should be very reluctant to delegate its powers on any matter of importance.

And in this regard, tax is a special case.

The contest between Parliament and the King (and his ministers) to control taxation is one of the great themes in the shared history of the English speaking people.

Indeed, there is a good argument that it has been the driving force behind our constitutional arrangements.

As controversies go, this is hardly the type of things to inflame popular passions. Voters are not likely to start sharpening their pitchforks when they hear that the Tax Administration Act 1994 is going to be changed (if they hear about it at all).

I doubt there is a single vote to be won or lost on this issue.

But just because a matter is unlikely to shift votes, it does not follow that the matter is not important.

The ancient prerogatives of Parliament are in the people’s interest, even if the people don’t find them particularly interesting. And as technical as the matter may be, the trend towards delegated lawmaking undermines Parliament’s sovereign birthright.

This is the kind of thing we have a loyal opposition for. Let us hope its members can be stirred from their Twitter feeds long enough to at least make a fight of it.