Claims reported on the AM radio program this morning about a 'confidential' document concerning the treatment of compliance costs under the New Tax System are misleading, Australian Competition and Consumer Commission Chairman, Professor Allan Fels, said today.
"AM claims to have 'obtained a confidential discussion paper that has formed the basis of negotiations between business, consumer groups and the ACCC. According to the paper, companies will be allowed to pass on their implementation costs to consumers through higher prices'.
"There is nothing new or confidential here. The ACCC's approach was made public at a major media conference attended by most media last July! The approach was set out in published draft guidelines, widely reported and widely circulated to business and consumer groups.
"Moreover the issue of compliance costs had a fresh run on television, radio and newspapers last month (following the debate about a limit of 10 per cent on individual price rises).
"The consumer movement has been consulted about this issue at all stages.
"Regarding the actual issue of compliance costs the ACCC has always said that net additional reasonably incurred compliance costs can be passed on in prices providing no one price rises by more than 10 per cent.
"Mr Connolly of the Consumer Policy Centre claims that 'businesses could claim anything as a compliance cost'. This is wrong and irresponsible.
"The ACCC has generally been regarded as having a tough approach to compliance costs. It has pointed out in television interviews (for example, Channel 7 Sunday Sunrise on 31 January) that additional compliance costs are likely to be wholly or partially offset by benefits to business for example:
- by savings in not having to deal with the existing tax regime;
- by additional assistance provided by the government;
- cost savings associated with the expenditure on the compliance costs , such as efficiency gains from a computer system; and
- cash flow benefits obtained by businesses from monies collected in advance of payment of the GST liability.
"These comments were widely reported at that time.
"Moreover, where those compliance costs are of a capital nature, such as for new accounting equipment, it is expected that any cost impact on prices would be spread over a number of years in line with currently accepted accounting depreciation rules.
"I pointed out at the time that there is a tendency to exaggerate and sometimes wrongly attribute compliance costs as well as neglect compliance cost savings.
"It has also been pointed out publicly on several occasions that some businesses may take the opportunity provided by the New Tax System to introduce new and improved accounting, operational and management systems.
"Many of these costs are not attributable to the New Tax System.
"Accordingly it is fair to say that Mr Connolly's concerns are highly exaggerated".
Online versions of many of the ACCC's most important guidelines and publications and online text of the past 12 months' media releases are available on the ACCC website.