The Magna Carta – foundation of the rule of law: musings from the Senate Inquiry

Walking to a Committee Room in Parliament House a fortnight ago, I paused at a display cabinet celebrating the octocentennial of the Magna Carta signed by King John at Runnymeade on 15 June 1215 under pressure from the barons of the day. While the document did not have a happy birth and was purportedly annulled by Pope Innocent III, it has become a symbol of the importance of the rule of law in our political system. Unfortunately that respect has not always been honoured.

There is a tax case 440 years later where one George Cony refused to pay a silk tax which the Lord Protectorate, Oliver Cromwell, had imposed without the permission of Parliament. Cony was imprisoned, as was his legal advisor, Sir John Maynard. Cromwell told the Judges of the Upper Bench, who were inclined to invoke the 1215 charter in defense of Cony and Maynard, that “their Magna Carta should not control his actions which he knew were for the safety of the Commonwealth.”

Another 360 years later and the rule of law in tax cases is still as topical as ever.

The reason that I and Rosheen Garnon, National Managing Partner Tax were in Parliament House was to appear at the Senate Economics Reference Committee on Corporate Tax Avoidance. Our appearance was one of 21 sessions. All in all, nine corporates, five involved in mining, three in digital services and one in media; four government bodies being the ATO, Treasury, ASIC & the OECD; four academics, four associations, our three “Big 4” colleagues, two trade unions, the Uniting Church and a former ATO employee appeared.

Rosheen, amongst many comments, strongly defended the importance of the rule of law in relation to tax matters. She also noted the need to modernise our international tax rules, and, with me, made an impassioned plea not to “jump the gun” on the OECD-G20 process, but to move with other countries based on broad international consensus.

I have had some time now to reflect on the hearing and our role in it. In an important way, I am very glad of all the questions we were asked and am proud of our response to them. Those questions sometimes reflected a view of members of the community with little exposure to our world of business taxation.  It was enjoyable for us to speak to that, even in a small way, as representatives of the tax community.

There is a book I had read years ago of a troubled region of the world. In it, a distinction was made between those who like their history nuanced and those who do not. The latter derive strength from black/whiteness.

The same thing can be said of tax. If one is truly interested, one will be drawn into a myriad of nuanced questions of what, why and how.  But if one doesn’t value nuance and cannot see complexity or the role we take in a sometimes incoherent world, the answers are both simple and predetermined.

It is often very difficult to influence some people on business taxation. But most are receptive to complexity and nuance and understand the important role we in the tax community have in society.

A final thought. 15 June 2015, like the famous date 800 years ago, is a Monday. Far from the banks of the Thames at Runnymeade, but not far from Lake Burley Griffin, the Senate Economics Reference Committee is due to hand down its report on Corporate Tax Avoidance. Let us hope that this happy coincidence prompts both an affirmation of the rule of law and a deep understanding of some of the nuances of taxation.


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