In search of a purpose to our tax laws: can we trust the judiciary?

We face a dilemma. Comprehensive tax legislation designed to minimise avoidance opportunities results in complexity and specific anti-avoidance rules that are inevitably sidestepped. On the other hand, general antiavoidance\ud rules (“GAARs”) invariably lack guidance as to their scope of operation and add a further layer of complexity. History demonstrates that ultimately the GAAR is narrowly interpreted, legislation becomes more complex and the tax system loses credibility.\ud \ud A departure from the classical principles of interpretation and the traditional style of legalistic drafting is necessary. In this new environment the judiciary would be instructed to interpret tax legislation with a view to\ud its objects and, where necessary, to make tax policy. Parliament would fully particularise the objects to which provisions are directed and access by the courts to explanatory material would be permitted without fetter. A Tax Policy Committee, comprising stakeholder representatives, would have the mandate to elaborate on legislative policy, rule on whether revenue rulings\ud infringe this policy and/or recommend amendments to clarify legislation. The penalties regime would be receptive to the reality that the search for the “true” meaning of legislation is illusory