Raising the GST is not the way to protect consumption, Herald Sun, 12 January
After another Christmas gift splurge, many Australian families will be tallying the cost of last year’s spending spree with trepidation. But as the Turnbull Government begins putting together the 2016 budget, it should have a similarly wary eye on the nation’s future consumption.
In an interlinked economy, one person's spending is another's income. When you go to the supermarket, fill up at the petrol bowser, buy some new clothes or eat dinner out at a restaurant, that all provides income to other people. This household spending makes up about three-fifths of Australia’s economy. So changes in consumption matter a great deal for the nation’s overall economic health. Treasurer Scott Morrison seems to understand this, as he recently described protecting household consumption as: ‘the most important thing for us over the next 12 to 18 months’.
If protecting consumption is this government’s top economic priority, then jacking up the GST is just about the worst possible approach for it to take. It’s basic economics: make things more expensive and people will consume less of them.
GST = GOVERNMENT STRUGGLES ON TAX
The Turnbull Government’s plan to jack up the GST would be doubly damaging for Australian consumption if it does not enforce the same tax rules on overseas retailers.
A report in today’s Australian Financial Review highlights the risk that foreign companies selling goods online will simply ignore their obligation to charge GST and send the money back to Australia when new laws come into effect from next year.
At the moment, goods bought online worth under $1,000 are 10 per cent cheaper than in Australian shops because foreign companies are exempt from collecting GST. The Government intends to abolish this threshold in 2017, but there are question marks over how it will enforce this change.
The Australian Financial Review has put together an end-of-year feature on underrated virtues - here's my contribution:
Some years ago, William Muir, an evolutionary biologist at Purdue University, decided to study the productivity of chickens. The control group was an average flock of chickens, which Muir simply left to breed and produce eggs as usual.
His treatment group were specially selected, by taking the top performers each generation. These chickens were then bred, and the process repeated to create a race of ‘superchickens’.
After six generations had gone by, the control group were happy, healthy, and reasonably productive. In the treatment group, six of the nine superchickens had been murdered. The remaining three had pecked each other so brutally that they were nearly featherless.
Writer Margaret Heffernan has told this story to dozens of audiences. Many tell her: ‘That superflock, that’s my company.’
GHOST OF ERIC ABETZ HAUNTS CHRISTMAS WAGE OFFER AT IMMIGRATION
Joint media release with Shadow Minister for Employment and Industrial Relations Brendan O'Connor
The Abbott-Turnbull Government has taken the Liberals’ attack on the public service to a new low with its latest enterprise agreement offer at the Department of Immigration.
At the last election, the Abbott-Turnbull Government promised that there would be no more than 12,000 public service job losses. Having broken that promise by sacking 17,700 public servants in the past two years, the Government is now proposing to dismiss a further 680 staff from Immigration as part of a pay deal that already offers workers below-inflation pay rises and cuts to conditions.
Suggesting 680 workers have to go in order for their colleagues to receive such a meagre pay deal shows just how much the extreme industrial relations approach of Eric Abetz continues to infect the Government’s public service bargaining.
THURSDAY, 17 DECEMBER 2015
SUBJECT/S: Tax transparency report; MYEFO; U.S. interest rates; polls.
PATRICIA KARVELAS: Qantas, Virgin Australia and Vodafone – they're household names – and nearly 600 more of the largest companies in Australia paid zero tax the year before last. On top of that is a long list of big businesses that paid a far lower rate of tax than most of us mere mortals. All has been revealed in a tax transparency report handed down by the ATO today. Andrew Leigh is the Shadow Assistant Treasurer and he's been a regular on Drive for a long time. We're welcoming him back for the last time this year; how are you, Andrew?
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Very well Patricia, how are you?
KARVELAS: I'm well. Are the rest of Australia's taxpayers getting ripped off by these big public and multinational companies?
LEIGH: Patricia, it certainly starts a conversation about tax fairness, which I think is the important thing about transparency. When the Liberal Party voted against tax transparency in 2013, they said: it doesn't matter, the tax office has the information so the public doesn't need to see it. But I think the advantage of having this information out in the public is that we get to have a conversation about whether our tax laws are keeping up with the very well-paid accountants who are looking for the next tax loophole, and whether there are tax loopholes that we ought to be looking to close.
KARVELAS: Assistant Treasurer Kelly O'Dwyer says that just because these companies didn't pay tax, it doesn't mean they're avoiding tax – is she right?
LEIGH: I was a little surprised that Kelly O'Dwyer's first instinct was to jump to the defence of these firms. I think you need to recognise that you can be strongly supportive of business without necessarily being supportive of loopholes. When firms are taking advantage of loopholes, that's more tax the rest of us have to pay. It's more tax that small businesses have to pay, and more tax that working Australians have to pay. With the plans that Labor has on the table, one of the ways in which we would look at budget repair is through our multinational tax plan which would raise $7.2 billion over the course of the next decade by closing down debt deduction loopholes that multinationals are using. That's one of the ways in which some of these firms have reduced their tax bill: by having internal debts and internal borrowings, whereas they owe very little to the banks. They're just borrowing between different arms of the same multinational entity. We don't believe you should be able to do that if you don't owe any debt to the banks.
Putting the spotlight on company tax dodgers, Business Spectator, 18 December
Every year, the International Tax Review nominates its ‘Global Tax 50’ – the people and organisations who are most influential in improving tax systems around the world. Two years ago, David Bradbury made the list, for being ‘a vocal and pro-active voice on a variety of tax issues’.
One of Bradbury’s award-winning reforms was tax transparency – laws that required the tax office to report the tax paid by firms with total income above $100 million. The Liberals didn’t like the change, and voted against it at the time. After winning government, they set about trying to repeal it – first by warning of kidnap risk, and then by suggesting that it might embarrass some firms if the public knew how little tax they paid.
Farcically, the government said that it wouldn’t pass its own multinational tax package unless the parliament agreed to wind back secrecy. In effect, Scott Morrison was holding a gun to his own head, but the Greens Party fell for it. On the last day of parliament for 2015, the Greens Party agreed to amendments that kept two in three private companies out of the tax transparency net.
This week’s release of tax transparency data has shown the value of letting the sunlight in. The 1300 economic groups covered by the report had a combined taxable income of $170 billion, and contributed $40 billion in tax towards funding Australia’s schools, hospitals and roads.
PARLIAMENT HOUSE, CANBERRA
THURSDAY, 17 DECEMBER 2015
SUBJECT/S: Tax paid by $100 million companies; Government in hiding on tax secrecy
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: On Tuesday this week we saw the Government bring down a mini-budget which contained cuts so harsh that even Tony Abbott and Joe Hockey wouldn't countenance them. We saw cuts to aged care; to childcare; to family daycare; we saw cuts to the Federal Police's international deployments; and we saw cuts to Medicare bulk billing.
In bringing down those cuts, Scott Morrison said, "Well, if you don't like these, show us your alternative." Today's release of tax data on Australia's largest firms points to exactly where that alternative might be.
The tax data that has been released today is data the Liberal Party didn't want you to see. The Liberal Party voted against the tax transparency laws when Labor announced them in 2013. Then, when they got into office they tried every excuse to wind them back, including suggesting this would lead to kidnap risk - an explanation described by one tax expert as the stupidest excuse for non-disclosure he'd ever heard.
ATO REPORT HIGHLIGHTS NEED FOR BETTER TAX TRANSPARENCY
For the first time ever today, Australians have the opportunity to see how much tax some of Australia’s largest publically listed companies pay thanks to laws introduced by Labor in 2013.
The Australian Tax Office’s reportpublished this morning detailed the tax contribution of over 1500 major multinational and Australian public companies.
The Liberals voted against Labor’s laws back in 2013. If they had their way, none of today’s information would have been published.
Worse still, the Liberal deal with the Greens last month to reduce tax transparency means that large private companies will not be subject to the same scrutiny we’ve seen today
WEDNESDAY, 16 DECEMBER 2015
SUBJECT/S: Government fails on debt and deficit with MYEFO.
MARIUS BENSON: Andrew Leigh, the Treasurer was not claiming they were great figures he was dealing with yesterday but do you claim that Labor would be delivering better figures on debt and surplus?
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Marius, you could hardly do worse than this. Debt and deficits were set as the main task of economic management by the Coalition from opposition. Most economists wouldn't say that was the hallmark of great economic management, but they did. On that mark they are failing spectacularly. This year's budget deficit has blown out by $33 billion. Total debt, when the Government came to office, was projected to peak at 13 per cent of national income and now it is projected to peak at nearly 19 per cent. So the debt and deficit blowout has been spectacular. I was struck by the fact that Joe Hockey kept on blaming Wayne Swan, and now Scott Morrison seems to be adopting a budget strategy of putting everything on to Joe Hockey. Australians just want a government that stops the blame game and starts acting to make sensible decisions in the long-term national interest.