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Keep socialist blog En Passant going - donate now
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)

Sprouting sh*t for almost nothing
You can prove my 2 ex-comrades wrong by donating to my blog En Passant at BSB: 062914 Account: 1067 5257, the Commonwealth Bank in Tuggeranong, ACT. More... (12)

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
(0)

Sick kids and paying upfront

(0)

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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In defence of a Liberal candidate supposedly under a dual citizenship cloud

I agree with the Liberal candidate in one of Canberra’s three electorates, Mina Zaki. Let’s stop the demands about her citizenship and eligibility to stand for Parliament. She deserves to stand. She is an Australian citizen.  Let’s believe what she says.

Hang on, you might ask. Why is a socialist defending a Liberal? It is a matter of principle. Every Australian citizen should have the right to run for Parliament, irrespective of background.  Section 44 of the Constitution denies dual citizens that fundamental democratic right.

In Zaki’s case, the demands are for her to produce evidence of her renunciation of Afghan citizenship. She has said she has renounced that citizenship and has provided the evidence to the Electoral Commission. That is good enough for me. Constant demands for her to ‘produce the proof’ hint at Australia’s heritage and favourite past-time, racism.

Section 44 is an expression of the racist views of the ruling class in the 1890s and its reflection in the white working class. Its aim was to exclude non-British people. The same class of people who gave us the Constitution gave us the White Australia policy.

Interestingly the concept of an Australian citizen only became a reality in 1984; before that, we were British subjects. As the National Archives state:

‘Throughout the 1960s, Australian citizens were still required to declare their nationality as British. The term “Australian nationality” had no official recognition or meaning until the Act was amended in 1969 and renamed the Citizenship Act. This followed a growing sense of Australian nationalism and the declining importance for Australians of the British Empire. In 1973 the Act was renamed the Australian Citizenship Act. It was not until 1984 that Australian citizens ceased to be British subjects.’

On the basis of a 2017 High Court decision and the 1992 decision of Sykes v Cleary, many of our pre-Second World War politicians, including some prime ministers, in retrospect, would have been ineligible to sit in the Parliament. But they were white and racism was a major narrative of Australian capitalism at the time — along with war. Some things never change.

That explains why a couple of dual citizens have in fact not only been elected to Parliament; they have gone on to become Prime Minister. Take Chris Watson for example.  He was born in Chile. In 1904 the fact that he was white seemed to be enough for him to avoid scrutiny.

Other Prime Ministers such as George Reid, Andrew Fisher, Joseph Cook and Billy Hughes were born in the UK. In those days, being British was enough to be what we now know as Australian, evidently. That is not true today, as Tony Abbott can attest. He renounced his British citizenship to ensure he did not fall foul of section 44.

The difference between Tony Abbott and Billy Hughes is the fact that Australian citizenship was created in 1984.  Abbott would have been OK and not needed to renounce his British citizenship before then because Australians were British subjects. Allegiance to the UK was allegiance to Australia

What is to be done? First, politicians from all sides could promise to vote against referring any section 44 citizenship matters of their opponents to the High Court. That can at best only be a stop gap response. 

We need to abolish the racist elements of section 44 of the Constitution. Australian citizenship should be enough to allow a person to stand for election. 

Mina Zaki is an Australian citizen. Let’s debate her policies and politics, not her background.

John Passant is a poet, an adjunct member of the School of Law and Justice at Southern Cross University, co- editor of the Journal of Australian Taxation, and a freelance member of the Canberra Press Gallery.  He publishes at En Passant with John Passant.

Contribute to help keep John Passant reporting from the Canberra Press Gallery

"We Can Do It!" Rosie the Riveter Poster : News Photo

En Passant is one of the most left wing blogs in Australia. Commenting intelligently on issues that arise in Australian and international politics from a revolutionary perspective, it aims to provoke debate and discussion among more left wing and socialist readers and activists. Its aim is to arm left wing readers with arguments against the latest capitalist atrocities and outrages.

I have been writing the blog, and railing against war, poverty, austerity, climate change injustice, Islamophobia, racism, sexism, and oppression (among other issues) since 2008. In short, I have railed against capitalism and all that is rotten flowing from it.

Not only that but I argue a way forward. We can make the world a better one through our own mass actions. Through our strikes, our demonstrations, our pickets, our boycotts, our sit-ins, we can change the world. These are examples of the fight for democratic socialism, of socialism from below.

We can and must fight in the here and now but ultimately to get rid of war, exploitation and oppression we need a world where production is organised democratically to satisfy human need, not to make a profit. That is socialism. All of us together can run our world.

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.

I have not in recent times been contributing very regularly to this blog. I have recently had my second book of poetry, ‘Whose Broken is This? and other poems'(Ginninderra Press 2018) published. A third book is nearing completion. In addition the duo The Awesome plus a host of other talented musicians have collaborated to produce, thanks to Milena Cifali of The Awesome putting 7 of my poems to music, a wonderful CD called Whose Broken is This? I also read 4 of my poems on the CD and The Awesome and others play one of Milena’s songs.

As well, I have been writing a weekly article for Independent Australia for some years. In August last year I became their Press Gallery representative. At about the same time I, a non-smoker for 36 years, was diagnosed with lung cancer. The type I have, Epidermal Growth Factor Receptor, is being treated with a tablet called Tarceva.

I have had a disagreement with Independent Australia. After discussions with the President of the Canberra Press Gallery, I have decided to continue as a freelance member of the Press Gallery.

I will post my regular freelance Press Gallery articles here while keeping access absolutely free. Hopefully I will also sell one or two to the mainstream media. To help this blog and its politics reach a wider audience, feel free to share my articles.

Most importantly consider keeping my blog going by transferring money to my Commonwealth Bank account:

  • Account Name: En Passant with John Passant
  • BSB: 062 914
  • Account Number 1067 5257

My costs are about $105 a week. Here is a list of approximate outgoings from memory.

  • $275 for my word press administrators – Domain group
  • $50 or so on average per year for refinements and repairs to the site by them. (This financial year it was $250).
  • $50 to Facebook to boost posts to Australian audiences of a few thousand. If I were to do this regularly (e.g. once a week, which is my aim) then my costs would increase to about $150 a week.
  • $3050 to mainstream media for subscriptions to the Sydney Morning Herald, the Canberra Times, The Financial Review and The Australian to stay abreast of events, issues and understand their views and commentary
  • $300 for subscriptions to left wing media (Crikey, New Matilda, and the like)
  • $79 business name registration for 3 years
  • $139 (?) for email address registration
  • $752 for Media, Entertainment and Arts Alliance (union) membership, including defamation insurance.

There are other ongoing costs I may well have forgotten.

$30,000 is my guess for my unpaid labour for writing an article daily for the website, distributing each article daily on social media etc. I am estimating pay at $30 per hour for two hours each day. Given I am writing less frequently than daily at the moment I estimate my unpaid labour costs at around half that, i.e. $15,000.

So my costs (excluding my unpaid labour) are almost $5350 per annum or about $103 a week. Boosting a post on Facebook once a week for $50 (an aim of mine) would increase the total of my costs per year to about $7850 and the weekly amount to $150 or thereabouts.

I receive no income from the blog. Since I am not likely to make a profit any time soon – only an upsurge in militancy by unions and social movements might see that and more likely people will turn to the established left wing papers and some mainstream media might veer a little left – I do not claim my losses for business tax purposes.

So if you want to keep an old man’s blog going so he can continue to yell at clouds, donate now. Details again:

  • Account Name: En Passant with John Passant
  • BSB: 062 914
  • Account Number 1067 5257

OLD MAN YELLS AT CLOUD Grampa Simpson The Christian Restoration Association cartoon text yellow comics vertebrate fiction


What is negative gearing, and what is Labor proposing?

Negative gearing just means an investments ongoing deductible costs are greater than its income. In other words the investment is losing money.

Many types of property can be negatively geared. The most obvious example is a rental property. Let me use that as an example.

Say I borrow $1 million dollars to purchase a property in Sydney to rent out. I borrow the whole of that amount, as say an investment loan, to buy the property. It is an interest only loan.

According to Kate Burke in Domain:  ‘Those with their heart set on a house have to look much further afield, casting their gaze about 25 kilometres south of the city centre to Caringbah and Gymea and their respective medians of $1.005 million and $1,002,500.’

Let’s run with Caringbah, in the heart of Scott Morrison’s electorate.  It is also a place I remember well from my youth, with my family visiting my grandmother there every second weekend or so from Wollongong.

Let’s assume I can borrow $1 m to purchase a 3 bedroom, 2 toilet, 2 car park, rental property. I buy a property in Caringbah and rent it out, say for $800 a week or $41,600 a year month. From this the agent deducts a 10% commission, and there are other cost like depreciation (2.5% of the initial construction price of say $500000), rates (say $2000,) and repairs (say $1000.)

Let’s assume the interest on an interest only investment loan is 4.19% per annum, or $41,900 for the year.

So my gross rental income is $41,600 a year.

For tax purposes I can deduct from that figure my interest costs, the depreciation, rates, commission and repairs and other income costs. Those deductions are interest on the loan of $41,900, the agent’s commission, being $4160, depreciation of $6250, rates of $2000 and repairs of $1000. These deductions total $56,310. (Insurance will be another deduction but I have not included that. There are enough figures already to give you the idea.)

So my rental taxable income is $41,600 less $56, 310. In other words am making a loss of $7130.

That is not where it ends. I can offset this loss against any other assessable income. Let’s say as well as rental income I have salary and wages of $203,000 (which coincidentally just happens to be a backbench MP’s salary.) There are a few costs I have in earning that, say newspaper subscriptions, deductible gifts etc totalling $2300. So I deduct those costs from my salary and wages to give me $200,700 taxable wages income.

But wait. There’s more. I can now deduct the rental loss of $7130 from this net salary and wages income of $200,700, giving me a net taxable income of $193,570.

So I have saved tax of 45% plus the 2% Medicare levy, of the amount of the loss, or 47% of $7130, a saving in tax of $3351.

Still, a loss is a loss is a loss. Why do this? The answer lies in part in the capital gains tax regime. I hope like hell my investment increases in value over the years.

Why? Again, let’s use some imaginary figures. Let’s say in five years’ time I sell the property for $1,450000. Leaving aside calculations that do not concern us (additions to the cost base etc) I have made a gain of $450,000 in five years (my sale price less my cost price.) I include only HALF that gain in my assessable income, i.e. I include only $225,000 as my taxable capital gain.  Nice work if you can get it. (Labor is proposing to halve this discount, i.e. reduce it from 50% to 25%.)

What Labor is proposing is to stop people like this imaginary me in the future deducting the rental loss ($7130 in my example) against my other income. However, that limitation is grandfathered. It will only apply to properties purchased on or after 1 January 2020. It also will not apply if the property I purchase to rent out is a new property.

A range of countries limit negative gearing. And despite the Coalition’s protestations, the major beneficiaries of negative gearing are the very well off. As the ALP says:

‘70 per cent of the benefits of the CGT discount and 50 per cent of the benefits of negative gearing go to the top 10 per cent of income earners.’

John Passant is a poet, an adjunct member of the School of Law and Justice at Southern Cross University, co- editor of the Journal of Australian Taxation, and a member of the Canberra Press Gallery.  He publishes at En Passant with John Passant.

Art and revolution – a poem

Can art fuel a revolution?

Are poems art?

Are words enough?

The lived experience

The falling value of labour

The precipice of profit

Before we fall off

Or rather it falls away

A landslide of lives lost


At what cost?

Not in dollars

But in our lives

And then the dollars, our dollars

Not yours

Food, kids, homes

Gone, all gone

Because?Profits are falling

Have fallen

We must rise to stop the fall

Of their economy

And our nature

The changing chameleon of climate

That their politicians deny

Or delay

The emergency is here

Fear not

Rise up

Reclaim humanity

Reclaim life

From the masters of our death

The bosses’ deadly breath

Must stop

We, the many, can

They the few cannot

Stop the rot

Make life art

Make life a revolution

Of love

Of humanity

Of freedom

Revolution is our art

To come

Soon, one day

Hear her breathing

The gentle loving sway

Of living air

In and out

There is no doubt

Our poems will overwhelm them

Our music throw them

Our strength destroy them

And life can begin at last

John Passant 5 May 2019

The left in Australia, Assange, and sexism

Can we on the left chew gum and walk at the same time? When it comes to Julian Assange it appears for many the answer is no.

Of course, we have to oppose Assange being extradited to the US.  The major imperialist power wants to punish him for his service to humanity in revealing, yet again, the crimes of the leaders of the so-called free world. In jailing or executing him they want to send a message to the rest of the world, especially potential leakers, that revealing the truth about US imperialism, that it pursues its own interests ruthlessly and is the enemy of humanity, will be punished severely.

Wikileaks revealed recent Western leaders like Bush, Blair and Howard for the liars and, in my humble opinion, the unprosecuted war criminals they are.  The Collateral Murder video for example shows US troops shooting from a helicopter and killing 18 people (non-combatants, including 2 Reuters staff). The reality is clear. The US wants to stop the world from knowing about its litany of war crimes and other dirty actions. 

For that reason alone we on the left must oppose Assange being sent from the UK to the US.

Clearly the political case for not extraditing Assange to the US is strong. It is an argument about a free press and the role the media do and should play in revealing the truth about our governments.  It is instructive to see the mainstream left in Australia, the Labor Party, unite with the mainstream right, the Liberals and Nationals, and refuse to really help Assange in his fight against being extradited to the US.

The Labor Opposition (up to its eyeballs in the invasions of Afghanistan and Iraq) has supported the Liberal Prime Minister and his wishy-washy comment that Assange is receiving ‘standard consular assistance’ from the Australian government. This is code for ‘the Australian government is doing nothing to upset the US and will sell Assange to Trump for a good relationship with the chief imperialist power.

It is also instructive to see the radical left and progressive left outlets side with Assange. And what is wrong with that? you ask. Sweden is my answer.  Two women allege Assange committed sexual offences against them.

The Swedish authorities wanted to extradite Assange to Sweden for questioning. It was this action that saw Assange flee to the Ecuadorian Embassy in London and claim asylum, a claim that was granted.

Assange claims the Swedish complaints were a ruse to get him to Sweden and then to extradite him to the US. Various internationally well-known left-wing figures agree. There is however no evidence that these complaints stem from anything other than two women wanting justice.

If there is any lesson for the left to learn from the MeToo movement it must be to believe the women making the allegations of assault, domestic violence, sexual assault, rape or whatever they happen to be.  For too long patriarchal capitalist society, and with it, sections of the left, have not done this, or have not been prepared to do it.

I sent an article to two left-wing progressive independent media about the attempt to extradite Assange to the US and the rape accusations against him.  I made the ‘chewing gum and walking at the same time’ observation that we should support sending Assange to Sweden to answer the rape accusations, not the US.

Both groups rejected my article, with very similar reasoning. They said they were running a pro-Assange line and could not publish something that contradicted their general editorial position. This is a problem of Murdochian proportions.

Other publications on the left ran stories that either did not mention the alleged sexual crimes, or downplayed them. The left is still full of those who do not believe women.

Not believing women is one of the consequences of the oppression of women in capitalist society. Their labour is worth less; their word is worth less. If the Assange case is any guide, many left wing publications and organisations appear just as infected with sexism as the rest of society.

As UK Labour’s shadow Home Secretary Diane Abbott said in a letter to colleagues, ‘rape is a heinous crime in which far too few perpetrators face any consequence, and far too many survivors are denied the justice they deserve.‘ She called for Assange to be sent to Sweden over the rape allegations if the case were reopened and Swedish authorities wanted him in their country to answer those accusations.

I agree with Diane Abbott. The misogynist, sexist and patriarchal left has been ambiguous about male sexual abuse for too long.  Assange is the obvious example.  

If requested, extradite Assange to Sweden to face investigations into sexual assault claims. Do not send him to the US.  See, we can chew gum and walk.

John Passant is a poet, an adjunct member of the School of Law and Justice at Southern Cross University, co- editor of the Journal of Australian Taxation, and a member of the Canberra Press Gallery.  He publishes at En Passant with John Passant.

Candidates resign – racism and Islamophobia remain

Jessica Whelan and her Islamophobia is not an aberration. She reflects the views of many Australians. She reflects the views of many Liberal Party voters. She represents a growing force in the Liberal Party itself.

To recap. Whelan was accused of an anti-Muslim Facebook post. She claimed her post had been hacked. Prime Minister Scott Morrison said he had referred the hacking matter to the Federal Police. The police have since confirmed that 18 hours later and they had received no referral.

As Bill Shorten says, the police referral (if it happens) was an attempt to buy time and a cover up. Of course. The problem for Scott Morrison is that other posts show she is a serial anti-Muslim bigot. Has the Prime Minister misled the Australian people, unintentionally? Or has he just been hoodwinked by Whelan, hardly a crack double dealer.

How could Whelan have become a Liberal candidate? Would more thorough checks by the Liberals have stopped her? Excuse my laughter. The Liberal Party’s softly-softly racism (as opposed to Whelan’s open racism) attracts the open racists, or gives support to them, and to other bigots.  It is not far from the slogan ‘stop the boats’ to ‘stop the Muslims’.  It is a short distance from the Coalition to One Nation.  Just ask the Nationals, who are preferencing One Nation.

The Liberals have preferenced Palmer’s United Australia Party second. In my seat of Bean the UAP candidate is Tony Hanley. His posts are racist and sexist, with words like ‘fem-nasties, dykes, big fat fugly chicks, Dolly Birds FEMBOTS’ and, on Saudi Arabia, ‘tea towel heads!’

Just a reminder. He is the Liberals second choice.

There is a fight for the soul of the Liberal Party in Victoria. The geniuses who ran the Victorian branch of the Liberals courted Christian fundamentalists. The fundamentalists now have significant power in the party and have turned on the geniuses who bought them in. Not only are these fundamentalists anti-Muslim, they are homophobic, to the extent of wanting to stop gay Liberal MPs like Tim Wilson.   

There will be a bloodbath in the Liberal Party in Victoria, and perhaps elsewhere, after the election. There is no guarantee ‘the moderates’ will triumph over the reactionaries.

In the run up to this election two of these anti-Muslim, homophobic Liberal right-wingers, Peter Killin and Jeremy Hearn ,have been sacked as Liberal candidates for their homophobia and Islamophobia. Whelan has now joined them.  In fact, of the ten candidates (yes ten!) who have resigned in the 15 days since the election was called, 7 are Liberals.

The problem is not vetting. The problem is the ongoing move to the right of Australian politics, and the underlying racism of Australian capitalism and the Liberal Party.

Labor is not immune. Their candidate in the Greens’ held seat of Melbourne is Luke Creasy.  Seven years ago, when he was 22, he posted a rape joke. Labor has been defending him – he was young and stupid then but not now – because they thought they might have had a chance of winning the seat.  Not any more.

What happened to principles, Labor? Sack him. As it turns out, there are more posts – anti-lesbian and anti-Catholic – that raise questions about their candidate.  Shorten was waiting for a report back but in the hour or so since then Creasy has resigned as the Labor Party candidate. So, make that 11 candidates having resigned or been sacked so far.

‘So far’ is the operative phrase. There will be more. The reality is that social media can expose the real candidate to the whole country.  For a party like the Liberals that wants to dog whistle its racism, open racism is at the moment a no-no. Given the ongoing move to the right of the major parties over the last 3 or so decades, it cannot be too long before the lIberals become openly racist.

Oh, hang on, any remember Peter Dutton and the then Prime Minister Malcolm Turnbull warning about African gangs in Melbourne in the run up to the Victorian election?

The problem is not social media. It is the nature of the candidates the major parties attract, and the society in which these candidates grow.  As the major parties continue their shift further and further to the right economically, socially and politically, the gap between the open racists, Islamophobes and other bigots and the dog whistlers who are the major parties will become less and less.

This perhaps opens up a space on the left. The Greens sort of fill that gap, although they are not a party of the working class. At the moment the working class is very quiet with, for example, strike levels at historic lows.

For people like me, the voting options are pretty narrow. In other States and electorates socialists are standing. In Victoria 3 different socialist groups have formed Victorian Socialists. They are running in three Victorian electorates. Socialist Alliance is running candidates in electorates in WA, NSW and Qld and in the Senate in WA and NSW.

Of course, voting socialist will not change the world. It will send a message to ‘left ’parties like Labor and the Greens that real left-wing ideas can win support. The long-term aim of Socialists running in elections is to build their organisation(s) and support, not just votes. When workers re-enter the stage of history they hope to be there with them, for them, and of them.

Until then, striking can defend and improve wages, jobs and conditions.

John Passant is a freelance member of the Canberra Press Gallery. Mainstream or other media wishing to reprint this article should contact John to discuss the rates for doing so. To keep the blog alive through donations for example contact John for details.

Our prize – a poem

Our prize

I win no prizes
Not even the packers
I have some backers
Who love live words
Those words that catch the mind
Half formed, in front,
Behind,

The display of everyday
Written in another language
Not babbling books
Or winter water
But the past glance
The calm that enhances
The daily grind and finds

A secret mind, a place
Of peace
Unlike this world
Of war, coups, arms and racing to disaster
Man made, and man made
Always man
Or women who have joined them

Their pictures on our walls
Not mine
Their words our books
Not mine
Their thoughts our thoughts
Not mine

My thinking unread, unsaid
Except to music and recorded
For my future

And yours
Read as well
Stop this hell
Of unwashed politicians
Lipsticking the corpse
Coursing the dead veins
Of yesterday’s men and women

These unforgiven
Live a century removed
From today
Another way seems impossible
Till it begins

And I win a prize
A read from you
That will do
And the nineteenth century men
Are sent away, for a fleeting time
A day

Until they rule again
Read, read against these men
And join the doing that ends their rule
The prize is not mine
It is ours

John Passant 
20 May 2019

Election 2019 – capital gains tax reforms

Labor has announced a few tax proposals. Let’s have a go at explaining the capital gains tax changes.

Until 1985, capital gains in Australia were not taxed. As any tax economist will tell you, capital gains are income. As any tax lawyer will tell, the judges say they aren’t.  

When Keating made net gains taxable, he opted to only tax real gains (i.e. to take inflation out of the gain.)  Let’s say I bought an asset (e.g. a block of land) for $510,000 in year 1.  (Year 1 sounds a bit Orwellian doesn’t it?)

Ten years later, in year 11, I sold the untouched block for $1,500,000.  I spent nothing on it. Let’s assume inflation over that period of time totalled 33 1/3 percent, so the increase in price in the asset caused by inflation would be from $510,000 to $680,000) – $510,000 plus (1/3  x $510,000). In other words, the real gain, the gain over and above inflation, was $1,500,00 less $680,000 or $820,000. After working out the average rate of tax on 1/5th of that gain, that rate would be applied to the whole gain.

Assuming I was on the top marginal rate of tax already, and I had adequate private health insurance I would pay tax almost at the rate of 45% plus the Medicare levy of 2%. So, ignoring the five year averaging, 47% tax out of the gain of $820,000 (i.e. $385,400) leaves us with an after tax amount of $434,600 plus of course the untaxed inflation gain amount of $170,000, or $604,600.

In fact, this specific adjustment for inflation was (more or less) abandoned in 1999. A rough and ready but simpler calculation instead allows a taxpayer to only include half the capital gain in taxable income – the capital gains discount.

In our example the difference between the purchase price and sale price (the net capital gain) was $1,500,000 less $510,000. Under the 50% rule I would include only half the capital gain, i.e. half of $990,000, or a net $490,000 in my taxable income. Again, assuming I am at the top marginal tax rate, the 45% tax plus 2% Medicare levy paid on that half gain would be $230,300, leaving me with $264,700 after tax PLUS the $500,000 untaxed, or in total $765,000 in my pocket.

Other income, such as wages, interest, rents and the like, is not adjusted for inflation. On the other hand, those income amounts are received on a regular basis through the year, whereas capital assets can be held for years before the gain is made.  So, in my example, the gain is not spread over the ten income years I made it in but is taxed in the year of sale, putting me into the top 45% plus 2% rate.  If the $990000 gain were spread over ten years, then that would be $99,000 a year if we spread it crudely, working backwards.

The point is that if I were below the top marginal tax rate (say on the minimum wage of $37,000) then the rate of tax I paid each year on the $99,000 gain would be much less than the top marginal tax rate. Including half the gain of ten years in the final year, i.e. the year of sale, puts me in the highest marginal tax rate for much of the gain, given the size of the gain, even if I were on the minimum wage.   The 50% discount supposedly counterbalances the increased tax.

However capital gains are made by and large by the top 20% of income earners, and the higher the income, the greater the capital gain. So, this 50% discount rule benefits those wealthy people who make their income in the form of capital gains.

Labor’s proposal is to cut the discount from 50% to 25%. It recognises that the 50% discount overcompensates rich people for inflation.

Personally, I’d be in favour of abolishing the discount altogether. Treat capital gains like all other income. Do not adjust capital gains for inflation until the tax on wages is adjusted for inflation (e.g. by increasing the various levels at which tax kicks in by the rate of inflation.)

It would then be a case of spreading the gain over the income years in which it arises. Of course, the tax would not be paid until realisation. A simple calculation device could do that, I assume. Certainly, the ATO with its billions of dollars in technology could devise a simple system to arrive at the correct amount of tax. The fact that the tax money has not been paid in years one to 9 in my example means interest might have to apply to those amounts. So add in an amount of interest on top to compensate the revenue for the lack of payment over the previous years.

Labor’s proposed reduction in the capital gains tax discount from 50% to 25% brings those whose income is from capital gains closer in line to the treatment of, for example, currently unindexed wages income, but gives some compensation for the possible increased taxation effect of taxing the gain in the year the asset is sold, rather than spreading the gain over the number of years the asset was held.

So if we are going to have a crude estimate of these complex factors, a discount of 25% seems fair. It is certainly better than a 50% discount.

One other thing Labor could fix is the exemption for non-residents from CGT, except where the asset is land. Why should a non-resident who owns shares in say an Australian bank and sells them at a profit not be subject to Australian capital gains tax?

John Passant is a former tax academic and a former Assistant Commissioner in the Australian Tax Office. He is a freelance member of the Canberra Press Gallery. Mainstream or other media wishing to reprint this article should contact John to discuss the rates for doing so.

Election 2019 – the first debate

I watched Morrison and Shorten in their first election debate. I might be lesser evil biased but I thought Shorten won.

Why? Because Shorten talked about policy, about policies, and about fixing problems that touch us all in our lives, like low wages, health care, dental care, even climate change.

All Morrison offered was ‘Labor bad, Labor taxes,’ without much more. I think Australian workers (and I suspect capitalists) want some vision from their politicians. Morrison offered none.

It was like watching a debate between last century and last year. The Coalition are stuck in the past – the 1980s perhaps. Labor by comparison look modern because they are ‘only’ stuck in the early 2000s.

The differences on climate change show this clearly. The Morrison government is a prisoner of fossil fuel thinking. Labor at least recognises the need for some action although given the impending crisis its remedies are too litle too late.

Just when we need radical action we will, if Labor is elected, have ‘softly softly don’t upset the horses’ change. The horse and buggy era died over a century ago. The petrol car is possibly going to suffer the same fate on a global scale by the mid 2020s or perhaps as late as 2030. And where is the planning, the investment in transport technology (such as electric charging stations) and renewable energy to bring this change about, and make it an environmental success? Nothing from the government; a little from the Opposition. But we need more, much more.

I am reminded of a famous quote from the future Lord Hailsham, or Quentin Hogg as he then was in 1943:

‘If you don’t give the people social reform, they will give you social revolution.’

Maybe the pace of climate change is too slow, or maybe its frequent events appear too disconnected, to produce such a response. Maybe, although the student strikes show a potentiality to head in that direction. And as George Monbiot argues, capitalist climate change is killing humanity and that can only now be solved by radical action, or as I would argue by a democratic and socialist working class revolution.

But I digress. The battle between last century and last decade continued throughout the debate. Shorten pointed out various needs that he hoped to meet – for higher wages, for better dental care, for more health and education spending, all in the context of incremental changes. The proposals are OK, but why limit them as Labor is doing to childcare workers, or pensioners, of families with young kids?

As I have argued, an unfettered right to strike, and encouraging workers to strike for higher pay and conditions, and defending jobs, would be much better, and more thoroughgoing and modern (and last century) class response. Labor are not going to do that. They are about managing capitalism, not governing for workers.

It appears I am not alone in my view that Shorten won the debate. The audience appears to have thought the same thing, possibly for much the same reason. Policy, even inadequate or limited policy, beats inaction every time.

John Passant is a member of the Canberra Pres Gallery. Mainstream and other media wishing to republish this, please contact John for permission and to discuss the appropriate fee.

Election 2019: the cost of living

Mr Morrison pulls a face as he misses a ball. People watching on are laughing

ABC News: Adam Kennedy

It is now 17 days into the election campaign and the offerings today (Sunday) highlight the differences between the Coalition and the Labor Party.

The Prime Minister offered more fear of refugees; the ALP offered cheaper childcare, better wages for childcare workers and free dental treatment (up to $1000 over two years) for seniors and pensioners. According to Labor, 3 million pensioners and seniors will be better off under their dental scheme. [What about students, the unemployed and the low paid Labor? Why aren’t dental costs part of Medicare for everyone? But I digress.] And over 880,000 families will have cheaper or free childcare.

The Prime Minister on the other hand promised to ‘cut’ the immigration intake at 160000 (its current level). They will also if re-elected freeze the humanitarian refugee intake at its current level of 18,750 (compared to Labor’s promised 32,000 by 2026). Not only that but, contrary to the usual bleatings from the Conservatives, there would be a quota on the number of humanitarian refugees to ensure 60% were women.

I suspect promises trying to address the cost of living and showing some compassion are likely to resonate more with voters than the tired old trope of refugees or immigrants or whatever as the enemy.

Wages have been stagnating for a few years now. This fact alone (apart from skyrocketing prices in some sectors like childcare and healthcare) creates very real problems for millions of Australians.

Yet the decline in real wages, and the consequent shoveling of more and more income and wealth into the pockets of capital, the very rich, is not an accident. It is a response to ongoing processes and changes in Australian and global capitalism, aided by Australian government policies. Couple that with a labour movement led by and large by people scared of their own shadow and beholden to the Labor Party and ‘change’ from above, and the forces needed to improve wages and living standards have a huge challenge ahead of them.

Attempts to reduce cost of living pressures will resonate. According to Michelle Grattan, under Labor’s childcare proposal:

  • families with children under five on incomes up to $174,000 would be better off on average by $26 a week – $1,200 a year – per child
  • the majority of families earning up to $69,000 would get their child care free. This would save them up to $2,100 annually per child.

Those families with income above above $174,000 would receive the same amount of support they currently receive.

Bill Shorten has also talked about increasing the pay of child care workers by 20 percent. This is admirable. He has even threatened price controls on child care centres that increase their prices to hoover up the $4 billion in government benefits he is proposing for the parents of children in child care. That too is admirable.

We could but hope it might be the start of a new reality. Price controls on a range of basic commodities – fresh food, other groceries, electricity, oil, petrol, interest rates, rents, etc – would help working class people struggling with ever increasing costs and low wages.

Unfortunately Labor will not regulate prices for the benefit of workers. For a start such controls at a Commonwealth level are likely to be held to be unconstitutional. Second, Labor is not the party to put controls on capital. It is the party who, as the Accord and its echoes down the decades show, has freed up capital while holding back labour. Third, Labor in power, at the Federal or State and Territory levels has not once in the last few decades mentioned let alone attempted to control prices.

Labor are, when all is said and done, a party whose aim to is manage capitalism. The Party has close links to the trade union bureaucracy. That bureaucracy has a material interest in continuing to balance between labour and capital (i.e. not be part of either class) but to be the retailer of the price of labour. This locks the trade union bureaucracy, and its Party, the Labor Party, into unquestioning support for capitalism and the continuation of their own privileged positions.

Labor’s proposals for wage increases, whether it be for child care workers, or raising the minimum wage, or for other groups of workers I suspect they will identify before the election to win their votes, raise an important question. Without strikes, how are workers supposed to win big wage increases and defend jobs?

Let’s take child care workers. Shorten is right. With a workforce that is 96 percent female, they are, like many female dominated industries, poorly paid. Shorten has promised them a 20 percent pay increase, over eight years.

Leaving aside the fact that they deserve the 20 percent now, how is Labor going to deliver on this aim? That is not clear to date from any utterances by Shorten or other Labor luminaries. Through legislation? Taking a case to the Fair Work Commission? Exactly how will they deliver this? And what about all the other female dominated low paid industries? Don’t all these workers deserve a big increase in their wages?

Other moves by Labor, such as restoring penalty rates, will improve the lives of hundreds of thousands of workers. (I merely note that the promised increase in employment promised if penalty rates were reduced has not eventuated. Is anyone suprised?)

Their talk about a living wage as opposed to a minimum wage will, if it becomes a reality, improve the lives of millions of workers.

If it becomes a reality. That is the real test.

You will have to excuse me but without class struggle undermining the power and dominance of the ruling class and winning big real wage increases, I cannot see much besides a dog’s breakfast of a few minor pay increases coming for the low paid, those on the minimum wage and child care workers.

To change the rules we need, as Sally McManus said before she became totally infected with Actuitis, to break the rules. Labor could legislate an unfettered right to strike to help workers win big pay increases. They won’t. The ACTU could lead big so called ‘illegal’ strikes to win large pay increases. They won’t.

Only rank and file workers can create the reality of increased real wages.