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Tag Archives: tax haven

Do you want Welfare with that?

Image from theland.com.au

Image from theland.com.au

It’s Kevin Heaven again!  Our Welfare Warrior is back in the game and planting the flag, or wrapping it around his svelte figure, in acts of true olde time patriotism.

Such is the great work that Kevin Andrews (Photo:Jason South) performs.  Ever ready to announce a merger for efficiency, or a crackdown on welfare dependents (aka dole bludgers); he is at the front lines in Tony Abbott’s war.  The ex-workers at Holden and SPC will no doubt be thrilled to hear that after years of government & management incompetence they will face a much harder test to qualify for any welfare spending in their attempt to find new work.

With this great charge toward tightening belts on the shrinking waistlines of those unable to pay taxes, let us make some further suggestions for other areas to conduct a similar campaign to clamp down on our ballooning budget crisis by confronting those who are merely unwilling.

Global Googly

Google Australia has paid no tax on roughly $940 million in advertising revenue. Instead of sacking hundreds of ATO workers and outsourcing tax compliance for big corporations to private accountants, why not task these apparently surplus staff to crack down on global tax avoidance.

Currently individuals and corporation have Trillions of dollars ferreted away in offshore havens and secretive jurisdictions.  Money earned in one country is claimed as profits in another; so that Australian companies signing up for Google advertising are actually giving their money to an Irish arm of the search giant, thus avoiding tax on revenue.

According to the Uniting Church they are not alone.  Several listed Australian companies including News Corporation, Qantas and the ‘Big Four’ banks have subsidiaries in secrecy jurisdictions where money earned can be quietly kept from the prying eyes of the tax man.

Some may laud Kerry Packer’s quote about minimizing tax, the problem with that approach is that health, education, roads, defence, and politicians cost money.  If corporations pay less tax, the rest of us have to pay more.

Sick System

The importance of manufacturing is bandied about a great deal, and if the Australian public were interested in the long-term macro-economic consequences of purchasing imported cars and groceries then perhaps Ford, Holden & SPC would still be viable businesses.  However the $6 billion in assistance meted out to the auto industry over four years pales in comparison to the $5 billion that Private Health insurers receive every year.

Unlike cars and tinned fruit, Australians do not have a choice about health insurance.  Not if they want to avoid paying the Lifetime Health Cover fee.  As a result 9.7 million adult Australians now pay for private health insurance, roughly 57.1% of the population.  The lowest premiums start at about $45 per month, and in 2014 some premiums are slated to increase up to $300 per year.  Almost all of these attract the 30% rebate from the Commonwealth tax coffers, resulting in billions of dollars in direct subsidies.

When one also compares the inefficient 14% of income that private insurers pay on administration to the 5% costs incurred by the public insurer MediBank, one could be forgiven for wondering if all those billions could be better spent directly into the health system rather than being filtered through the pockets of corporate insurers.

Ground Breaking

Then there are everyone’s favourite martyrs, the miners.  Direct contributions by the Commonwealth to mining companies in 2012 tallied up to about $492 million.  However, thanks to generous fuel tax concessions and tax write-offs real support payments reached $4.5 Billion.

Former Howard adviser, now Minerals Council spokesman Ben Mitchell argued;

“The fuel tax was imposed to build public roads. Mining builds its own roads and that’s why we get a credit on that.”

He also insists that the $550 million in deductions claimed for exploration and prospecting are not just a cost of business, but a business input that the tax-payer should refund to them.

Keep in mind that the billion dollar hand-outs from the Commonwealth do not include what is chipped in by the states.  Queensland tax payers are funding the mining industry to the tune of $1.4 billion per year.

Would these companies be less profitable without this tax-payer assistance?  Yes, though to echo the Prime Minister, perhaps they should “Get their house in order” so that public money can be spent on building infrastructure instead of funding corporate salaries.

For example, taking only the annual $9-10 billion per year doled out to private insurers and miners (ignoring the tax dollars not collected from multi-nationals) it would only take four years to pay the additional $30 billion needed to complete the full FTTP National Broadband Network.

Like rail, ports and roads before it, FTTP infrastructure would create a new highway for business to grow and replace the failing auto manufacturers, encourage growth in dying regional areas, reduce the cost of public service delivery, and build new markets and a stronger economy that Australia can transition to as traditional manufacturing and mining continue to fade as meaningful contributors to the economy and employment.

Mr Abbott has also quoted and paraphrased American right-wing shock-jock Rush Limbaugh’s quote “No country ever taxed itself to prosperity.” To which I would reply with the inestimable wisdom of another American, Oliver Wendell Holmes, Jr.

“I like to pay taxes. With them, I buy civilization.”

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