As title-fights go, this is a big one. A man who has called himself ‘Prince’, vs a government department which has called itself ‘God’.

The history of the Hutt River Province is fascinating, and something that I took an interest in some years ago and read up on. I’m a little surprised (although I shouldn’t be) that the ATO has picked this fight:

The long-running war of independence waged by the self-proclaimed ruler of the Hutt River Province has been challenged by the Australian Taxation Office, which claims he owes $2.65 million in unpaid tax.

In a writ filed in the WA Supreme Court, the tax office alleges Leonard George Casley, who calls himself His Royal Highness Prince Leonard, failed to pay income tax between June 2006 and November 2013 — a period spanning eight financial years.

The ATO is suing the 91-year-old monarch to recover the alleged multimillion-dollar debt, which is made up of $1.47 million in unpaid income tax and running balance account debt, $756,000 in penalties and $415,000 in interest.

Here’s the catch, in its 46 year history the independence of the Hutt River Province from the Commonwealth of Australia has been affirmed by the ATO in 2005 who deemed them ‘non residents’ for tax purposes, and the Queen herself (the head of the Commonwealth, no less) put herself on record just this year as recognising the peaceful secession of the Hutt River Province from Australia in 1970:

The letter from Buckingham Palace is signed by Mrs Sonia Bonici, Senior Correspondence Officer.

It reads in part:

“I am to convey Her Majesty’s good wishes to you and to all concerned for a most enjoyable and successful celebration on 23rd and 24th of April to mark the forty-sixth anniversary of the Principality of Hutt River.”

So if the Queen recognises their successful succession and as a separate nation within the United Kingdom, I’m going to guess the ATO is going to have trouble making their case.

My gut tells me this isn’t about the taxes, but is a political move designed to ensure no one else gets the same idea. Micro-Nations are more feasible than ever thanks to modern technology which enables them to do business with the world around them and to achieve basic hallmarks of nationhood such as energy independence far more easily than ever before.

Seasteading, whilst still in the realms of science-fiction, is becoming more feasible every year, and international Tax competitiveness is about to step up massively if Trump goes through with his plan to cut US Corporate taxes to 15%.

So what does this have to do with the ATO suddenly having a crack at the Hutt River Provinces independence from Australia? Well if the Hutt River folks get away with it, others will try, and the ATO is in damage control mode. Australia is creeping higher on the list of most-taxed countries in the world, we’re being micro-managed and over-regulated, and our epic run of economic growth is most definitely coming to an end, meaning people are going to start feeling the consequences of our national financial mismanagement in ways we didn’t in 2008 or 2000.

And all of that means that rich people, smart people, and especially rich and smart people are going to be heading for the exits. Some will move overseas to more tax-competitive jurisdictions, others will structure their affairs so the bulk of their income isn’t assessed for tax in Australia, even if they still live here… and some people might get it into their heads that they should ‘opt out’ of Australia, without going anywhere. And that’s who this court case is aimed at, in my opinion.

Expect much chest-beating from the ATO, they will milk this for all the PR they can get. Remember the long-running investigation into Paul Hogan? Lots of people still think he owed taxes, but in fact no charges were ever brought, and the ATO ended up just walking away.

I think the ATO have a vested interest in stringing this out for as long as possible, making it as expensive and damaging to the Prince as they can. Because I suspect they know they can’t win.

If they actually follow through and take this to court (unlike what they did with ‘Hoges’) then my prediction is that the ATO will win in the WA Supreme Court, and then lose on appeal in the High Court. Time will tell.

And I think I should pay the Hutt River Province a visit in the near future, and spend up big while I’m there. They’ll need the money to take on the ATO, and I’m always happy to give to a good cause…

EDIT: I also wonder, upon further reflection, if this is in response to the renewed media hype around becoming a Republic. If Australia secedes from the Commonwealth there’s going to be a lot of people who will be interested in seceding from the Commonwealth of Australia, in order to stay in the Commonwealth of the United Kingdom. For all its imperfections the UK has given us a relatively stable and liberal legal system and political system, and many of the problems we’re facing today stem from us moving away from that heritage.

The Hutt River Province are a separate Principality within the United Kingdom. They seceded from Australia, and placed themselves directly under the Queen. This was a smart move for a lot of reasons, and is going to be one of the key reasons the ATO will lose this case.

If Australia decides to become a republic you can expect some land owners in various parts of Australia to be considering their options… including secession. I wonder if the government knows this, and is launching a pre-emptive strike. If they can string this case out long enough so it’s still ongoing when the next republican referendum happens (what a monumental waste of money that’s going to be!) then they’ll be able to point to this case to intimidate anyone who might think about following suit. The fact that a few years later the ATO will most probably walk away and drop the matter entirely is no loss to them, they don’t pay their legal bills, we do! The case will have served its purpose if they keep it going long enough.

Let the Games begin!

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