Tax reform is not ‘above politics’

Australia’s tax system is in desperate need of reform. Few, if any, would say that it doesn’t. However, the path to reform suggested by accountancy firm Ernst & Young (EY) in a recently published report is the wrong way to go about it.

EY’s report, titled Tax Reform: A Better Way, recommends the formation of a new, apolitical and independent tax-reform commission to provide advice ‘that the community accepts as independent, expert and fearless’, according to EY chief executive Rob McLeod

Not only does this proposition ignore the fact that the federal treasury department employs more than 800 bureaucrats to provide such advice, it also reflects a certain disbelief that democratically elected politicians can make meaningful change to society, particularly where economic policy is concerned.

In his essay published on spiked last week, Phil Mullan points out the ways economic policymaking has become detached from democracy and democratic politics. The increasingly technocratic attitude towards economic policy, which treats it as a technical discipline that can operate outside of government, has grown in popularity, and EY’s recommendations are a reflection of this. The prevailing attitude is that economic reform and the implementation of economic policy involve merely adjusting key variables to achieve a desired outcome. It is this belief that gives rise to the idea that panels of experts, like the proposed tax-reform commission, are better equipped to make economic policy than democratically elected representatives.

Nowadays, it is tempting to say that politicians are all bastards and that they shouldn’t have any say in anything. But the point is that they are elected bastards – and this carries more weight than any PhD in economics ever could. Economics is not bigger than politics; it is an essential part of it.

Ultimately, as EY has said in its report, the government could reject any advice given by the Tax Reform Commission’s experts. However, this does not change the core issue: that economic policy is seen as something that needs to be decided and set by experts. To the assertion that ‘tax reform is too important to be left to politicians‘, we must say leave it to those elected bastards.

Charlie Pearson is a writer based in London.