ga('send', 'pageview');
John Passant

Site menu:

March 2011



RSS Oz House



Subscribe to us

Get new blog posts delivered to your inbox.


Site search


My interview Razor Sharp 18 February
Me interviewed by Sharon Firebrace on Razor Sharp on Tuesday 18 February. (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. (0)

Razor Sharp 4 February 2014
Me on 4 February 2014 on Razor Sharp with Sharon Firebrace. (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

Sick kids and paying upfront


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. (0)

I am not surprised
I think we are being unfair to this Abbott ‘no surprises’ Government. I am not surprised. (0)

Send Barnaby to Indonesia
It is a pity that Barnaby Joyce, a man of tact, diplomacy, nuance and subtlety, isn’t going to Indonesia to fix things up. I know I am disappointed that Barnaby is missing out on this great opportunity, and I am sure the Indonesians feel the same way. [Sarcasm alert.] (0)



Resource rents and company tax rates: tax big business

The Minerals Resource Rent Tax is a pathetic little tax which will raise less than Tony Abbott’s lunchbox.

It was a rotten deal in which Gillard and Swan gave the big miners everything. Treasury estimates it will mean a loss of about $100 billion in revenue over ten years compared to the slightly less pathetic Resource Super Profits Tax.

Not only that, but Labor is going to use half of the little revenue it raises from the MRRT to business through company tax cuts. Not better public hospitals, not better public schools, not better public transport, but tax cuts for the big mining companies and banks.

The Greens have announced they will oppose these tax cuts for big business. It probably won’t do much good. The Government has split the tax cuts from the Minerals Tax bill. If both pass the House of Representatives, which looks likely, then the Opposition will side with the Government to pass the tax cuts and the Greens will side with the Government to pass the MRRT.

Evidently if the tax cuts for big business don’t go through it will be the end of civilisation as we know it. At least that is what the big business organisations are saying, but in the words of Mandy Rice Davies, they would say that wouldn’t they?

Ireland had the lowest company tax rates in Europe. After all that investment and job creation and increasing living standards as a consequence, how is the Irish economy these days? Desolate, distraught and on the brink of bankruptcy.

The real obscenity in all this ruling class rubbish about tax rates is that big business doesn’t pay much tax at all.

In a speech in February last year Deputy Commissioner of Taxation Jim Killaly said that 40 percent of big business (those with a turnover greater than $250 million) had paid no income tax in the three income years between 2006 and 2008. He also said twenty percent of those companies were actually making accounting profits.

The global financial crisis is likely to have increased the number of big businesses not paying income tax to perhaps 50 percent or more.

Analysis by Adele Ferguson and Stuart Washington in the Sydney Morning Herald showed that most industries actually pay much less than the headline 30 percent company tax rate. For the finance sector for example they found the figure was 20 percent. For mining companies it is between 13 and 17 percent.

In other words almost half of all big business pays no income tax and those that do mostly pay much less than the notional 30 percent headline rate.

Now the Australian Tax Office has begun doing some tax gap analysis which compares economic activity to revenue collected. And the figures might be showing big business is rorting the system

Michael D’Ascenzo, The Commissioner of Taxation, Michael D’Ascenzo, has recently talked about possible ”fragility” in the company tax system. Profits have gone up but company tax has gone down in the years after the GFC.

Some of the gap at least is due to tax avoidance – shifting GFC losses into Australia, transfer pricing and the like. Some of the gap may be due to the growth in the mining sector, a sector with high levels of tax deductions. The answer is to cut these deductions.

The cut in company tax rates using the MRRT revenue is an attempt to redistribute some wealth from a few mining companies to all of capital. As the Greens argue that revenue, meagre as it is after labor’s sellouts, could be sued to fund socially necessary and progressive spending on health, education, housing and transport, not to mention renewable energy.

Labor is using the tax system to redistribute the wealth we create to the less profitable sectors of society. The social democratic dream is dead.

I have a suggestion for the Greens. Not only oppose the company tax cut for big business but propose thoroughgoing reform which brings all big business into the tax net and forces them to pay the headline rate.

Getting rid of the tens of billions of dollars of business concessions in the tax system would be a good start. Introducing a minimum company tax might be a decent follow up.

Couple these measures with increasing the company rate to 39 percent and introducing a real super profits tax on all economic rents (think banks as well as mining companies) and Labor would wipe out the deficit and have enough money to fund decent public health, education and transport in Australia and begin the move to a renewable energy economy and future.

Tax business and the rich.



Comment from Arjay
Time March 29, 2011 at 8:32 pm

John,Webster Tarpley proposes a Tobin Tax or turn over tax of 1% on all share market Currency/transactions.

A turnover tax will stop will catch everyone.

Comment from Graham Dooley
Time March 30, 2011 at 8:39 am

What an infantile argument you present here, obviously playing to your audience of fellow travellers. Mate, how many small businesses do you think a business tax cut might benefit? Ask any tradie driving around looking for work what a tax cut for their business might mean? You cannot get past the petty prejudices and simplistic world view that obviously drives your thinking and your writing. Grow up.

Comment from John
Time March 30, 2011 at 9:12 am

Why is it infantile? Actually the Greens argue for the cut for small business. Your view is incredibly simplistic. If only tradies didn’t pay tax the world would be so much better off. Problem is then we’d have no schools or hospitals or roads… Why shouldn’t big business pay some tax for a change? You know, a super profits tax would make no difference to investment or jobs. Don’t just take my word for it. Read the Henry Tax review.Maybe we need an Australian version of the UK Uncut group or whatever it is called.

Comment from Tony
Time March 30, 2011 at 9:34 am

Graham Dooley: Is this you? If so, your reaction is understandable.

Comment from Graham Dooley
Time March 30, 2011 at 10:02 am

Like I said, infantile. Company tax is paid on declared profits. If I cannot generate a profit I pay no tax. If a Government attempts to engineer a new way of taxing me I will seek advice to minimise the impact of that new tax. There are lots of ways to generate consolidated revenue to fund infrastructure, bashing businesses with your undergraduate arguments is not one of them. Cheers

Comment from Graham Dooley
Time March 30, 2011 at 11:16 am

I guess if you moderate your own blog you get to edit out all the nasty opposing views. How refreshingly Stalinist.

Comment from Graham Dooley
Time March 30, 2011 at 1:52 pm

hahaha, no more “John”, we’ll have to call you Old Joe instead. Great piece of content control. Tells me all I need to know.

Comment from John
Time March 30, 2011 at 5:08 pm

WTF are you talking about you moron? Go back to your Adolf Hitler hole and slander and defame people there.

Comment from John
Time March 30, 2011 at 5:18 pm

Ah, expecting business to pay tax is infantile and undergraduate. Imposing tax on super profits is infantile and undergraduate. Gee, I hope you don’t ever do tax. Company tax is actually paid on taxable income which is, as any undergraduate will tell you, often somewhat different to declared profits. Maybe you should read the Treasury Tax Expenditures statement 2010 to get a sense of how much the tax system is used to deliver disguised grants to business. And as anyone who has read about economic rent would know, the argument is that taxing super profits has no impact on jobs or investment. Why don’t you read the Henry Tax Review where the then head of Treasury makes these exact points. No doubt his arguments are infantile too. I expect however that is beyond you because it has big words and concepts in it that go beyond your simple and moronic level of understanding. Childish nonsense.

As for your abuse, based on a complete misunderstanding, more fool you for rushing into print without any understanding of the reality. Uncle Joe/Stalinist indeed. it is in fact that sort of personal abuse that is more suited to the style of dictators – shouting down those you disagree with. Find a blog more suited to your crap. Maybe a kindergarten one would suit your intellect. Join the bullies since that seems your style. Troll.

Comment from Arjay
Time March 30, 2011 at 5:33 pm

Kerry Packer used to brag about paying 1% tax.There are many Corps making huge profits and paying almost no tax.The tax act is that complicated that a good lawyer will find a way.

I spoke to a tax Professor just last yr and he said the whole act needs scrapping but there are too many powerful Corp interest groups who won’t allow it to happen.

So Graham Dooley needs a reality check.Currently we have rule by the Corporates that is destroying real competition and a prosperous economy.The fractional reserve system of banking must end.

Perhaps Graham can enter into debate of some substance rather than ad hominem banter of mindless drooling.

Comment from Tony
Time March 30, 2011 at 5:49 pm

“lots of ways to generate consolidated revenue”

Heavily taxing reverse osmosis water production in addition to a carbon tax would be a start. Let’s call it the Basic Rights Rentiers Tax (BRRT). Fully refundable to low and middle income households.

Comment from graham dooley
Time March 30, 2011 at 7:22 pm

hm, taking 3-4+ hrs to post opposing views sure seems to explain everything to me, nice reverse abuse too, glad to see even Old Joe couldn’t resist.

Comment from John
Time March 30, 2011 at 7:58 pm

Yes, some of us have to work during the day so we can’t rush to our other computer to publish your nonsense until work finishes. And today I was in hospital having an arthroscopy. You know – where you wait around in hospital for a few hours, then wait in pre-op for an hour and then they put you under anaesthetic for an hour or so. Perhaps I should have postponed that for your majesty’s pleasure? Or checked my blog in hospital while anaesthetised? Fuckwit. So you come on to my site, call me a Stalinist with no proof whatsoever and then wonder why I call you out for the reactionary idiot you are. Get real fool.

Comment from Tony
Time March 30, 2011 at 8:24 pm

Speaking of tax.

Comment from Graham Dooley
Time March 31, 2011 at 8:37 am

Glad to hear you are in robust health again, though what an angry person you appear to be – you must have a bile duct the size of a mack truck. On your MRRT anti-business rant I can only conclude by saying it aint as simple as you would like it to be. Targeting a sector to plunder will only drive more avoidance, ALP never learns, the Greens, well, it doesn’t surprise me. Most companies pay alot of GST and PAYG already, in a global market like mining you are on a hiding to none trying to exploit their short term success. If China goes into recession (big chance) then 25% of GDP may disappear – MRRT would look a bit limp then. A government with some spine would just raise the GST and provide targeted relief to those in most need. Chew on that for a while Joe.

Comment from John
Time March 31, 2011 at 9:14 am

Dear Graham, thanks once again for your Stalinist shit. You do your case no good by stuffing it full of this crap.

When and how does a super profits tax affect one job, or investment? I suggest, for the third time, you read the Henry tax review analysis of this. This might be a good place to start.

There may be the threat of a capital strike, but that is unlikely to eventuate. And Ken Henry hinted at a solution to that remote possibility – nationalisation. ‘Public production allows the government to control exploration and production expenditure, but may lower the return to the community if public enterprise is less efficient at resource exploration and production due to a lack of expertise and market discipline.’

Some corrections to your assertions. Companies don’t pay GST as part of their production process – consumers (mainly workers) pay the tax. PAYG is employers collecting tax on their workers’ income so the business doesn’t pay PAYG, workers do. The cost of collecting it (minimal) is borne by employers who get a tax deduction for those costs anyway. Here is an ATO link explaining PAYG.

A GST increases the burden on the poor and workers. Most workers won’t be compensated for it. It is like a carbon tax – regressive.

Chew on that for a while Shicklgruber.

Comment from Tony
Time March 31, 2011 at 9:29 am

“saying it aint [sic] as simple as you would like it to be” is the perfect smokescreen for plunder and blunder… Blind us with your wizardry of the great complexity. Have you read Dean Baker’s “False Profits”? I don’t see the industries you speak of as any less full of sophists. Please explain, in full.

“will only drive more avoidance”, it’s hard to see how. But let’s believe you, fully audit all these companies every year, that should help drop unemployment (employ more tax officers and extraction inspectors) and increase revenues. Enlighten us on how the process works? You seem to overlook, they are selling the taxpayers resource (a crown resource) with crumbs as a royalty. It could be said it isn’t much different to theft.

Yes, increase the GST, directing the tax burden to the little guy, again. Run a TV advertising campaign like the mining billionaires on that one and see how far it goes.

Comment from Graham Dooley
Time March 31, 2011 at 9:42 am

Cheers chaps, all very illuminating, good luck with the peoples’ revolt etc. Back to business.

Comment from Graham Dooley
Time March 31, 2011 at 11:57 am

Putting all your ideological baggage to one side, at a macro level Governments need to fund their spending programs, primarily via taxation and borrowing (e.g. bonds).

Taxation is the cheapest though least palatable method. No politician wants to be tagged as a “big taxer”, especially a big taxer of the consumer.

So who to tax?

GST is a broad-based tax paid by all consumers of goods and services, including companies.

If a shortfall arises from GST and borrowing (net of interest) then a Government might look for specific targets, e.g. using MTR to tax higher income earners more than lower income earners.

Taxing entities that employ capital and humans in productive enterprise because they achieve profits sounds punitive and is a disincentive to the pursuit of said employment and profit generation.

So do you keep plugging away at the targets or do you revise your spending programs or do you increase the GST?

I support the last 2 both from an efficiency and from a fairness perspective. GST rates can be increased and GST relief targeted to those deemed most in need (e.g. via Centrelink).

Calling for “big business” to “pay more tax” is just giving in to simplistic sloganeering and does not actually mean anything – without a lot of complexity in the form of legislation and compliance.

Australia’s tax legislation is already stupendously complex and arcane – and anti-avoidance measures are already there for rigorous enforcement.

Socialist dogma does not make sense in a world of global enterprise. It belongs to a time gone by, when ideologues held sway on University campuses.

Deaf ears will no doubt reject what I say here as “reactionary” (great old word, so long since I’ve heard it, priceless) but it isn’t Government (or socialist alternative nights) that generate the wealth that enables us to reflect like this – lucky us!

Comment from John
Time March 31, 2011 at 12:22 pm

I agree with one point – Australia’s tax laws are complex. This is because they are based on a false dichotomy of income and capital and because they contain a disguised spending program in which over $113 bn is spent through exemptions, extra deductions and the like.

Taxing all gains as income and having all the $113 bn disguised spending run as grants programs with set limits and set criteria would simplify tax law immensely.

I will repeat. GTS falls on the consumer, not business in production.

I note you don’t address my points that 40% of big business paid no income tax between 2006 and 2008 and that finally the ATO is beginning to look at tax gap analysis. Big business is a tax underperformer.

As to profit, it comes from our labour. It is value that those who own the capital steal from workers.

Write a comment