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John Passant

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October 2012



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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)



Tax, tax and more (or should that be less?) tax

Tax is much in the news of late.

It's been obvious all along!

The Treasurer this week has been telling us the Minerals Resource Rent Tax (MRRT) is working precisely as it should – not raising any tax. The hospital in Yes Minister worked perfectly too – it didn’t have any patients.

The MRRT’s failure, the Mid-Year Economic and Fiscal Outlook (MYEFO), the drop in company tax receipts, the impending departure of the Commissioner of Taxation and the collapse of the Business Tax Working Group have all highlighted the importance of tax to Australian capitalism.

Thus for example the MYEFO mini-Budget was mainly about tax.

Revenue from companies is running at about $2.5 billion less than forecast in the Budget and the MRRT only a few days ago was going to be about $1.5 bn light on from its previous nearly $4 billion estimate this year.

But wait. There’s more. The revised estimate of $2 bn from the MRRT was before we discovered that for the first quarter of its existence the tax didn’t actually raise any money and so may not even raise the estimated $2 bn over the year.

The Government has responded to the shortfall with a big tax fudge. It has bought forward large company tax collections. I know you will all weep tears of blood for big business who now, instead of paying their tax instalments quarterly, will pay them monthly.

The sleight of hand is that this brings forward two months of payment – April and May – that would have previously been rolled into the next year’s quarterly payment in July.

Companies have 21 days after the end of the quarter to pay their tax instalment. So if they are paying quarterly they pay in July (a new financial year) the tax for the quarter of April, May and June. Paying monthly means the April payment is made in May and the May payment is made in June, ie bringing forward the April and May payments from the next income year under the quarterly payment system into the previous income year under the monthly payment system.

This bring forward will improve the budget line by about $5.5 bn next year, and wipe out the loss of revenue from the MRRT and the company tax mentioned above.

There have been other less well publicised tax happenings.

The Business Tax Working group has collapsed. This was the group Swan set up to figure out a way of ending corporate tax rorts to provide enough money to pay for a significant company tax cut.

Business wasn’t prepared to accept a reduction in their rorts – deductibility of exploration costs, accelerated depreciation, limiting multinationals interest deductions and the like – to pay for their own general tax cuts. They want to have their cake and eat it too.

The amount of subsidies or grants big business receives through the tax system runs into tens of billions. But it is not just business who are suckling on the teat of the tax system. For example the top 5% of income earners receive ten billion in superannuation tax grants.

And remember how business demanded a Budget surplus to keep the economy running properly. Guess what? For business it is evidently OK to go into deficit, if the deficit is caused by a company tax cut.  Always back the bosses’ self-interest.

But Labor, the party that axed its Prime Minister because the Minerals Council didn’t want the Resource Super Profits Tax and the party that then negotiated such a rotten deal with BHP, Rio Tinto and Xstrata that the much restricted MRRT won’t raise a brass razoo, isn’t prepared to tax the rich or business.

Business doesn’t pay much tax. Between 2005 and 2008 40% of big business paid no income tax. Under the cover of the GFC the figure is almost certainly higher, although the ATO no longer makes the figures readily available.

Speaking of the ATO, Michael D’Ascenzo, the Commissioner of Taxation, has announced he will not be continuing after his 7 year statutory term ends in December.

Jennie Granger, one of the three Second Commissioners, bailed earlier this year and now works in the UK Inland Revenue. Another Second Commissioner retired, and the third one will retire next year if not sooner. A new one, from another Department, took up his role just this month.

The question is – was the Commissioner pushed, or did he jump?

As Jean Baptiste Colbert, Louis XIV’s Minister of Finance, said: “The art of taxation consists in so plucking the goose as to obtain the largest possible amount of feathers with the smallest possible amount of hissing.”

Under D’Ascenzo’s reign there has been a lot of hissing from business. They don’t like paying tax.

On the other hand the Government wants more tax, to paint itself as fiscally responsible and deliver a budget surplus. It also wants and needs a happy ruling class.

For example this balancing act between the Government’s need for revenue and the need to keep business happy is what drove the pathetic compromise over the MRRT.

D’Ascenzo could not pull off the same balancing act. In my opinion he went soft on big business but it wasn’t enough from their point of view.

Although big business had essentially captured tax policy making they haven’t captured tax administration. The global financial crisis and the decline in global profit rates turned their attention to the ATO and its ‘outrageous’ demands big business pay tax.

Sidelining D’Ascenzo, and appointing a new Commissioner, who I strongly suspect will come from outside the ATO, and possibly from private enterprise, is the Labor Government’s way of responding to business criticism of the fairly softly softly ATO approach to business as it is.

But since the capitalists are Oliver Twist writ large – please sir, I want some more – whose ALP and Liberal lackeys take turns to rule over us, they end up getting their way.

D’Ascenzo will go and an even more business friendly Commissioner will take the reins. This means a couple of things.

Tax policy is already moving in the direction of taxing labour more and more and capital less and less. Tax administration will follow. Now the focus of the ATO will shift even further from big business to the little taxpayer, that is to workers.

And as tax revenue from business continues to fall, in part because of tax avoidance, and the Government finds its harder and harder to squeeze more money out of ordinary workers, it will further cut social welfare, health and education spending.

Is there an alternative? Yes. Tax the rich. That is something Labor won’t do.



Comment from Mary
Time October 26, 2012 at 10:28 am

Its a rich man’s world all right!
Only the rich can afford a surplus!
The rest of us are taxed heavily.

Comment from John
Time October 26, 2012 at 10:52 am

Australia is actually a low tax country. It is just that the tax burden within it is borne by workers.

Comment from ross
Time October 26, 2012 at 5:11 pm

John our private banks borrow OS from private Central Banks who just create it in their computers.Why cannot our RBA create this new money to equal our inflation + growth? It would be a saving to us the tax payer at least $30 billion pa + interest.

Infrasture could be created debt free and our economy would boom thus providing more taxes for those who cannot help themselves.

It is the greed of a few that is limiting all human potential.

Comment from Mick
Time October 26, 2012 at 5:41 pm

Some great points, yes. Money makes the world go around which is why most of us are in a spin about it.

I’ve written a short post on global wealth in my latest blog, and this is part of it,,,,,,,,,,,,,,,

“So, if the majority of the world’s wealth is flowing to the minority (rich) of the population, then the reaction must certainly be an opposite flow of poverty to the majority.

And as these flows continue, they will increase at an exponential rate, until finally, all wealth is in 1 persons pocket, and the rest of us are starving and begging for food.”

And there’s even an old nursery rhyme here……………..



Comment from ross
Time October 26, 2012 at 7:53 pm

Mick as most now realise; “Money does not make the world go around.” Money is just the expression of human creativity and toil.It’s creation have been hijacked by an elite few.

The World derivative market is $ 700 trillion which is 10 times the GDP of the planet.There is no Glass Steagall Act to protect us.Only 10% of our money is backed by real worth.Has the penny dropped yet ?

What did the Great Deppression teach us?

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