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If you want to keep a blog that makes the arguments every day against the ravages of capitalism going and keeps alive the flame of democracy and community, make a donation to help cover my costs. And of course keep reading the blog. To donate click here. Keep socialist blog En Passant going. More... (4)

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My interview Razor Sharp 18 February
Me interviewed by Sharon Firebrace on Razor Sharp on Tuesday 18 February. http://sharonfirebrace.files.wordpress.com/2014/02/18-2-14-john-passant-aust-national-university-g20-meeting-age-of-enttilement-engineers-attack-of-austerity-hardship-on-civilians.mp3 (0)

My interview Razor Sharp 11 February 2014
Me interviewed by Sharon Firebrace on Razor Sharp this morning. The Royal Commission, car industry and age of entitlement get a lot of the coverage. http://sharonfirebrace.com/2014/02/11/john-passant-aust-national-university-canberra-2/ (0)

Razor Sharp 4 February 2014
Me on 4 February 2014 on Razor Sharp with Sharon Firebrace. http://sharonfirebrace.files.wordpress.com/2014/02/4-2-14-john-passant-aust-national-university-canberra-end-of-the-age-of-entitlement-for-the-needy-but-pandering-to-the-lusts-of-the-greedy.mp3 (0)

Time for a House Un-Australian Activities Committee?
Tony Abbott thinks the Australian Broadcasting Corporation is Un-Australian. I am looking forward to his government setting up the House Un-Australian Activities Committee. (1)

Make Gina Rinehart work for her dole
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Sick kids and paying upfront

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Save Medicare

Demonstrate in defence of Medicare at Sydney Town Hall 1 pm Saturday 4 January (0)

Me on Razor Sharp this morning
Me interviewed by Sharon Firebrace this morning for Razor Sharp. It happens every Tuesday. http://sharonfirebrace.com/2013/12/03/john-passant-australian-national-university-8/ (0)

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Memo to the Australian Tax Office: You offshoring jobs is the same as business offshoring profits

 

The Turnbull government is outsourcing or planning to outsource public service jobs offshore.  Noel Towell in an article in The Canberra Times in January titled ‘Manila calling: Public Service’s Philippines frolic revealed‘ said that ‘the Commonwealth [was] openly canvassing the idea of following the lead of the NSW government and sending some of its work to India.

In the same report Towell details via an Australian Tax Office spokeswoman what the ATO has been up to. He says:

‘The spokeswoman told Fairfax that the present arrangement, where Accenture is helping to develop new IT capabilities for the office, was temporary and had been in place for several months.

“Earlier this financial year the ATO commenced a short-term arrangement with Accenture to use their Philippines Delivery Centre to increase our IT capability in application development for new policy implementation,” she said.

“This additional capability is being used at peak times to temporarily support the ATO’s workforce and existing onshore arrangement with Accenture.

“The offshore development is being conducted in a secure facility that has been inspected by ATO staff and conforms to government physical and data security requirements.

“There is no taxpayer data going offshore and only anonymised development data being is being used via secure channels.

“The arrangement is expected to continue to December 2016.” ‘

So technically the ATO isn’t outsourcing jobs to the Philippines. It is allowing Accenture to do that. My guess is the contract price is less for the ATO than if Accenture had used Australian workers. The Tax Office will save money by doing this.

Of course, cutting costs has been a big driver in other ‘initiatives’ of the ATO. It has got rid of 3000 workers with another 1700 gone by the end of next year. That is about 20% of the ATO workforce, and much of it is experienced middle level workers. Despite glib assurances from ATO management that dumping one fifth of their workforce will make no difference to revenue collections, it seems logical to me to conclude that the loss of a layer of experienced and competent workers might not only slow down decision making (and hence slow down revenue collection) it has also result in less than optimal revenue outcomes.

The figures, with some major caveats, tend to back this up. Revenue collections have fallen since the sackings (sorry, voluntary redundancies) began. Now of course there are a whole range of external factors such as the end of the mining boom which help explain this. And the figures might be too early to judge in relation to the direct impact of the staff cuts. So how can we know?

Instead of having the silver tongued, ex-partner in an accountancy tax avoidance advising firm, leadership sprouting banalities, ATO staff should be able to talk to the public about the impact of the swingeing cuts on them. The Senate Economics Committee could consider calling staff still in the Office to testify about the cuts and revenue collections. I am sure too that it is not beyond the wit of journalists, union officials and tax officers to organise a bit of whistleblowing about the impact of the staff cuts on revenue, based on the experience of those at the coalface.

The recently released Corporate Tax Transparency Report shows that 38% of big business public companies paid no income tax. Many more had effective tax rates well below the statutory rate of 30%. Now I know there are a whole range of reasons for this, including poor trading conditions, the existence of special exemptions and deductions, various credits (e.g. for research and development and for foreign tax paid) but surely there must be a suspicion that the tax avoidance component of the tax shortfall in 2013-14 will only worsen in 2014-205 and later years as the ATO staff cuts kick in.

Maybe the staff cuts and adverse impact on revenue collection are part of the strategy of the ATO leadership to make the organisation more ‘business friendly.’

There is a symbiosis here between the staff cuts and tax avoidance that goes beyond the suspicion that big business doesn’t pay its fair share of tax and won’t into the future given the ATO’s staff numbers. The logic of the cuts, driven by a former tax partner in KPMG, a big tax advising firm to big business, and now the Commissioner of Taxation, is to create a leaner ATO. Yet this is the same logic of big business in avoiding tax. Business sees tax as a cost of business and, like all costs, competition drives them to find ways to reduce their tax bill and hence improve their profits. This leaves more over for reinvestment or to pay to shareholders. If the particular company is the only one in its industry using the particular lurk or scheme, then it also gains a competitive advantage over its competitors.

As Google Chair Eric Schmidt said about his company’s tax avoidance activities around the globe, activities which have seen it funnel almost $10 billion into Bermuda, saving $2 billion in taxes:

“I am very proud of the structure that we set up. We did it based on the incentives that the governments offered us to operate.”

The company isn’t about to turn down big savings in taxes, he said.

“It’s called capitalism,” he said. “We are proudly capitalistic. I’m not confused about this.”

Saving money, the driver for cutting the ATO staff by 20%, is also the driver of big business tax avoidance. Business tax avoidance is systemic. It requires a systemic response, not Tax Office staff cuts.

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Comments

Comment from Chris
Time February 7, 2016 at 10:47 pm

Pure racism. Protect jobs for whites.

Comment from Tom
Time February 7, 2016 at 10:54 pm

More racist filth from you John. Why do you hate workers for the Phillipines?

Pingback from Memo to the Australian Tax Office: You offshoring jobs is the same as business offshoring profits – WRITTEN BY JOHN PASSANT | winstonclose
Time February 8, 2016 at 3:07 am

[…] Posted by John, February 7th, 2016 – under ATO, Australian Tax Office,Commissioner of Taxation, Job cuts, Tax avoidance. Comments: none […]

Comment from John
Time February 8, 2016 at 4:39 am

Got to love the United Patriot Front/Reclaim white Australia fascist and racist trolls, the filth that comes on here to lie about me and make such allegations. Such an allegation suggests your United Patriot Front logic is being reversed. Good to see you defending non-white workers. Do your UPF mates know you are doing this? There is nothing racist per se about workers defending their jobs. Or about pointing out that the bosses want to cut labour costs. No doubt you support Gina Rinehart and her call for workers to be paid $2 an hour like some workers in other countries? I oppose Rinehart’s call. Presumably you don’t. I support workers of whatever colour whenever they fight to defend jobs. But since you accuse me of racism, let’s have a real debate about that. We can only do that if you reveal who you are and your background.

I note that Chris and Tom (both accusing me of racism) have the same internet address. ‘Their’ email addresses are fake too. So clearly they are trolls who will hide behind lies.

Comment from John
Time February 8, 2016 at 4:44 am

Ah Chris, such an allegation suggests your United Patriot Front logic is being reversed. Good to see you defending non white workers. There is nothing racist per se about workers defending their jobs. Or about pointing out that the bosses want to cut labour costs. No doubt you support Gina Rinehart and here call for workers to be paid $2 an hour like some workers in other countries? I oppose Rinehart’s call. Presumably you don’t. I support workers of whatever colour whenever they fight to defend jobs. But since you accuse me of racism, let’s have a real debate about that. We can only do that if you reveal who you are and your background.

I note that Chris and Tom (both accusing me of racism) have the same internet address. ‘Their’ email addresses are fake too. So clearly they are trolls who will hide behind lies.

Comment from Lorikeet
Time February 8, 2016 at 8:51 am

I’d like to know if the government has factored into the cost of the contract, the additional Newstart payments it will have to make.

Comment from Lyndhurst
Time February 8, 2016 at 10:04 am

When will the Government learn that the business of Government is not the same as the business of business.
It is the Government’s role to try to ensure full employment for citizens – not outsource it to a different country.
Although that said at least offshore workers might respond a but quicker than the ATO. I have been trying to report an overseas tax scam for the last couple of years but can’t get to speak to a real person. The scam is only over $8m in false invoicing but I think deserves a look as one of the companies involved is a notorious financial engineer from the GFC days. Is there anyone left at the ATO could they please have a look at case reference # 716924 and respond.

Comment from Lorikeet
Time February 10, 2016 at 10:35 am

The answer to this is easy, Lyndhurst. The government is working for Big Business.

The ATO is “too busy” requiring people who don’t owe them any tax to submit returns for a range of incomprehensible and irrelevant reasons.

Comment from Lorikeet
Time February 10, 2016 at 10:35 am

Excellent cartoon above.

Comment from Seen it all
Time February 10, 2016 at 7:55 pm

You observe:
“So technically the ATO isn’t outsourcing jobs to the Philippines. It is allowing Accenture to do that. My guess is the contract price is less for the ATO than if Accenture had used Australian workers. The Tax Office will save money by doing this.”

I would go a bit further and suggest that the work could be done cheaper in Australia by Australians if ATO and other organisations were not in the thrall of the big consultancies like Accenture.

There are plenty of Australian organisations with the capability to carry out such work and they charge a lot less than the ‘Big Four’ and use Australian staff.

Meanwhile there is high unemployment in IT and IT enrolments drop as prospective IT workers get the message.

By outsourcing such jobs while there is high unemployment the ATO loses the tax Australian workers would pay and then pays out a lot of Centrelink payments.

This is a disgrace.