|Issue No 34||08 October 1999|
Ray Hunt on Tax Reform
The current taxation try-on by the Howard regime - aided and abetted by the usual big business suspects - is designed to legitimise and entrench a scandalous and indefensibly low rate of tax paid by corporations.
If you pay more tax than you legally have to, you need your head read, according to one of Kerry Packer's more notorious pronouncements.
Contained in his abrasive short-hand was the seed of corporate practice the world over; and one of the more socially offensive sub-plots contained in proposed changes to Australian business taxation arrangements.
At the end of the day, the multi-national approach to global tax minimisation amounts to "beggar thy neighbour" tactics.
How else can you explain the short-term and utterly predictable effects of competition philosophy? Today's world's best practice, in whatever operation, can be under pressure again within a few years.
50% cuts in Australia's Capital Gains Tax rate - proposed by the Howard regime's Ralph review - are allegedly intended to encourage more highly speculative and/or volatile forms of investment.
Do we want more of this "hot" money? Has this been discussed?
And even if the Government manages to give the big end of town a huge capital gains tax handout, which other countries will drop their rate even further? France, perhaps, or Japan, the USA maybe ... probably a number of countries seeking a "competitive advantage." And it will happen within a handful of years.
Then the Australian government is once again placed under pressure to drop its pants on rates so as to allegedly maintain its, "competitive position."
Only one winner in this game.
Have you, comrade reader, taken part in any debate over the so-called business tax reform process? I know I haven't. But we've all seen and heard the attempts to "manufacture consent" by self-interested parties in the Federal Government and big business.
At first, the whole Ralph Review process was intended to be "revenue neutral" - that is to not increase or decrease the actual percentage of revenue raised from the business sector overall - according to regular public comments by Howard and Costello
Yet, the Government now proposes cutting Capital Gains Tax and handing an additional $700 million a year to the business sector, with the cost to be funded "from the surplus" according to Costello, while the Government has negun advocating cuts to the disability and single parent welfare payments ...
Any genuine debate over business taxation would have raised the desirability of the corporate sector paying a share of taxation approaching the levels of the rest of the community.
The Democrats, to their credit, raised a minimum business taxation rate option several months ago. It's a simple concept. No matter the structure, all businesses would pay an absolute minimum rate of 20% of gross income.
While I haven't heard this one being spoken of recently, the Democrats have tabled the only decent idea to emerge from this whole shabby pantomime.
New Ways To Tax?
We stand on the verge of an electronic era - and its attendant opportunities to raise huge amounts of taxation revenue from the tax-shy corporates.
Here's a few ideas that are floating around:
- US1 cent on every e-mail - easily collected via Internet Service Providers. US2 cents on each business e-mail.
- one per cent of every gross futures trade / two percent over $US1 million - easily collected via the Futures Exchange's automated trading system.
- one per cent of every gross share trade / two percent for trades over $1 million - easily collected via the Stock Exchange's automated trading system
- one per cent of every gross currency transaction / two per cent over $US1 million - easily collected via the Currency Exchange's automated trading system.
- one per cent of every credit card transaction - collected via banks. Two per cent on business credit cards.
- one per cent of business vehicle value per month - a Federal tax on companies grossing over $5 million annually.
- twenty per cent minimum business taxation rate - for those businesses grossing more than $5 million. The idea the Democrats floated originated with the Canadian left. The labour movements of Europe are also interested in this concept - they can see really desirable social outcomes way beyond the obvious economic benefits. By reducing the efficiency of complex accounting techniques, a "minimum" business tax would make evasive activity marginal to their 'bottom lines' and therefore immediately unattractive to business.
- two per cent carbon tax on all non-renewable fuels and energy - business and domestic - to fund global reforestation.
- one US cent per Internet search - easily collected through search companies. Two US cents on business Internet searches.
- Two per cent on every standard airline ticket / four per cent business class / six per cent first class.
- Two and a half per cent business turnover tax - an idea floated at Hawke's 1984 Taxation summit. Apply to companies grossing more than $20 million per annum.
- End deductions for negative gearing.
- Maintain the current Capital Gains Tax - no return to taxpayer subsidised long lunches.
And to stop the inevitable business bleating about Australia "losing its competitive edge," why not lobby all 29 OECD nations to introduce these measures simultaneously? The collector country could retain 75% of revenue with the balance forwarded to the UN - ensuring, for the first time, it was a truly independent organisation with sufficient resources to do its difficult job.
RAY HUNT is a Sydney-based broadcaster and writer
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