Scott Morrison’s decision to not continue with the green and white papers on taxation reform should come as no surprise to anyone.
Despite Scott’s assurances that he is going to keep talking, it is patently obvious that he is not going to do any listening, a trait that saw him eventually ousted from his job at Tourism Australia (which, ironically enough, was gifted to him by Joe Hockey in an act of blatant cronyism).
“Morrison fought running battles with Tourism Australia’s nine-strong board. Its members complained that he did not heed advice, withheld important research data about the controversial campaign, was aggressive and intimidating, and ran the government agency as if it were a one-man show.”
After enjoying success with “stop the boats” using a similar strategy, Scott has now planned his new campaign. The spin team have decided on the marketing strategy. Prepare yourself for a barrage of new slogans and buzz words:
Jobs and growth
Work, save, invest
Innovation, Entrepreneurs, Incentivisation, Competition, Agility, Disruption, Commercialisation
But you won’t hear anything about tax concessions for superannuation, negative gearing and capital gains. You won’t hear anything about a land tax or including the family home in asset tests. You won’t hear anything about fossil fuel subsidies or private health insurance rebates or dodgy financial advisers. You won’t hear anything about corporate tax evasion but you will be told endlessly that company tax must be reduced and the only way to pay for that is a hike in GST.
Will the same people who screamed blue murder about a carbon tax meekly accept the inevitability of a great big new tax on literally everything? Every time a price goes up, that increase will compound, unlike any compensation that might be offered which will be quickly whittled away. Do the people who boast about reducing red tape realise the work that will be involved in repricing all stock and reprogramming tills and computers? Have the champions of small business ever considered that a 5-15% price increase may be enough to send some businesses broke as they lose customers?
Morrison assures us we don’t have a revenue problem and that we must decrease the overall tax burden. This is completely at odds with Treasury secretary John Fraser (and everyone else who can read the figures), who pointed out that successive falls in tax receipts have been the “main driver” of every budget downgrade since 2014.
Australia is facing yet another year of below-trend growth, lower than expected tax receipts, and lower income from falling commodity prices with nominal GDP growing at 50-year lows.
“Much of the deterioration in the budget position has been the result of revenue collections falling short of forecasts as we experience the flipside of the mining investment boom,” Mr Fraser said.
“Income tax receipts are being weighed down by lower than expected working-age population growth and weaker wages growth, as well as declines in commodity prices and weaker equity markets.”
And Morrison wants to reduce income tax even further? Removing the carbon tax and the mining tax did nothing to stimulate investment or create jobs.
After wading through the Liberal Party’s National Innovation and Science Agenda Report, it is apparent their plan to boost “jobs and growth” is to protect investors.
“Innovation is critically important to every sector of the economy and the Government’s tax and business incentives under the NISA will encourage smart ideas to encourage innovation, risk taking and build an entrepreneurial culture in Australia.”
The new measures will:
- provide new tax breaks for early stage investors in innovative startups. Investors will receive a 20% non-refundable tax offset based on the amount of their investment, as well as a capital gains tax exemption;
- build on the recent momentum in venture capital investment in Australia, including by introducing a 10% non-refundable tax offset for capital invested in new Early Stage Venture Capital Limited Partnerships (ESVCLPs), and increasing the cap on committed capital from $100 million to $200 million for new ESVCLPs;
- relax the ‘same business test’ that denies tax losses if a company changes its business activities, and introduce a more flexible ‘predominantly similar business test’. This will allow a startup to bring in an equity partner and secure new business opportunities without worrying about tax penalties; and
- remove rules that limit depreciation deductions for some intangible assets (like patents) to a statutory life and instead allow them to be depreciated over their economic life as occurs for other assets.
“The Government will also reform insolvency laws which currently focus on penalising and stigmatising business failure. We understand that sometimes entrepreneurs will fail several times before they succeed – and will usually learn more from failure than from success.
“The reforms will:
- reduce the default bankruptcy period of 3 years to 1 year;
- introduce a ‘safe harbour’ for directors from personal liability for insolvent trading if they appoint a professional restructuring adviser to develop a plan to turnaround a company in financial difficulty; and
- ban ‘ipso facto’ contractual clauses that allow an agreement to be terminated solely due to an insolvency event if a company is undertaking a restructure.
“The NISA fosters an environment that incentivises and rewards innovation, science and taking risks to succeed. These measures are the next step in building a more innovative and agile economy.
They state that “The Internet is breaking down barriers to entry and presenting an enormous platform for innovation.” This vital piece of infrastructure “currently passes 1.5 million premises, with construction to begin in areas covering almost 7.5 million premises over the next three years”, a far cry from the vision that Labor offered and Tony Abbot’s promises in his campaign speech that “every household gains five times current broadband speeds – within three years and without digging up almost every street in Australia – for $60 billion less than Labor.”
Instead of investing in education in Australia, they intend to “change the visa system to attract more entrepreneurial and research talent from overseas.”
“To get the skills that businesses need now, the Government has been refining its visa settings – including by improving 457s for startups so that they can access the workers they need right now.”
We are told that “Every Australian will benefit from an agenda that puts innovation and science at the heart of government.” Personally I would prefer the scientific community to be running the show rather than the flat earthers who currently occupy the government benches and I am not sure that talk of entrepreneurial risk resonates with the majority of voters.
We have inflation below the RBA’s target zone and stagnant wage growth. This government’s solution is to cut penalty rates, import 457 visa workers, and destroy unions. To address falling revenue, they plan to cut income and company tax rates and give finance and risk protection to startups who are expected to fail more often than not.
Meanwhile, the consumers who would create demand, the labour who would produce the goods, the students who could provide the skills of the future, will all be paying more, working and earning less, and accumulating more debt.
No wonder Scott doesn’t want anyone discussing his plan.
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