This week the rulers of the Hutt River province received a $1.8 million tax bill, rising to $3 million with interest and penalties. It is the latest instalment in a dispute that began in 1970 when a farmer, Leonard Casley, declared independence from Australia and built his own nation, complete with currency, visa requirements, and rules. In 1977 the province declared war on Australia, because of a tax demand. They cancelled the conflict within days, but could not resolve their tax status.
In 2005 the Australian Taxation office (ATO) sent letters accepting that Prince Leonard and his son were non-residents. Subsequently they demanded payment of goods and sales tax for the period between 2006 and 2013. This liability came from the sale of souvenirs to the 25 tourists who visit the principality every day. Despite being aware of the principality the ATO allowed the debt to accrue for seven years and then took another four years to enforce it. Such tardiness restricts the ability of the government to deliver and forces debtors to pay more because of delays that were not of their making.
The judgment made it clear, if clarity was needed, that people cannot avoid paying tax by changing sovereignty. The unanswered question is why did the ATO take so long to reach this conclusion?