Should the GST be increased/widened?

[Smurf1976]

In that case perhaps we should take into account the level of subsidies that our overseas competitors receive when determining such things as tariffs and import quotas. Tax imports and use the money to subsidise our own producers.

Protectionism is out of fashion at the moment but I'm sure we'll see it again someday. Future generations will likely see another go at go at globalisation too since it's all cyclical.

But in the meantime, we're in a situation where governments of all persuasions expect Australian business to compete with the lowest common denominator overseas. As such, the last thing they need is to be paying a tax on all production.

 

[Value Collector]

Why not follow the Swiss and bring in broadly based wealth taxes.

The tax base for the wealth tax is net wealth, i.e. gross wealth reduced by the sum of the taxpayer's documented debt as well as personal allowances and social deductions that vary from canton to canton.



.

That sort of tax seems silly, different peoples net worth have very different earnings profile.

I mean a farmer that owns a farm worth $1M, might not earn very much on that capital, and a lot of that earnings is the result of labour.

Where as another guy that owns $1M worth of computers, might have a website earning $1M a year.

It would be like charging company tax based on the book value of the company, obviously different industries earn different amounts on the capital invested in them, Woolworths earns 26% on its equity others struggle to 5%.

The best idea is just to tax the profits, as we do now,

 

[SirRumpole]

The best idea is just to tax the profits, as we do now,

Yes, fine, as more companies are shifting profits offshore and avoiding tax.

 

[Value Collector]

Yes, fine, as more companies are shifting profits offshore and avoiding tax.

There is ways to reduce that, and they are far less complicated than your system of over taxation, and tariffs and subsidises etc

 

[SirRumpole]

There is ways to reduce that, and they are far less complicated than your system of over taxation, and tariffs and subsidises etc

Please tell us what these measures are, and more importantly, pick up the phone to Joe Hockey and tell him, because he's bottled out on trying to reduce company tax avoidance.

 

[sydboy007]

That sort of tax seems silly, different peoples net worth have very different earnings profile.

I mean a farmer that owns a farm worth $1M, might not earn very much on that capital, and a lot of that earnings is the result of labour.

Where as another guy that owns $1M worth of computers, might have a website earning $1M a year.

It would be like charging company tax based on the book value of the company, obviously different industries earn different amounts on the capital invested in them, Woolworths earns 26% on its equity others struggle to 5%.

The best idea is just to tax the profits, as we do now,

Seems to work for the Swiss

They certainly have a more diversified economy than we have.

I think taxing wealth is in some ways the fairest way to tax. Those who gain the most from the collaboration within an economy pay the most tax. Also makes it harder to loophole your way like the rich in Australia to paying very low % rates of tax.

 

[sydboy007]

There is ways to reduce that, and they are far less complicated than your system of over taxation, and tariffs and subsidises etc

Might be true except for

* EU 59B euro on famr subsidies
* USA - seems to be in the $20-30B range
* China $261B last year and rising 10% this year

Then we have the protection of manufactured goods in most of the richer countries.

It does annoy me when I see the supermarket chains using cheap imports to displace local produce simply because foreign tax payers are pumping billions of $ to subsidise their farmers production. I'd prefer some for of tariff equalisation that limits to nets out this subsidy. Then if the imports are still cheaper I can accept that on the basis of true competition.

 

[SirRumpole]

There is ways to reduce that, and they are far less complicated than your system of over taxation, and tariffs and subsidises etc

Hello, hello, calling VC, are you out there ???

Still waiting for your miraculous solution to foiling company tax avoidance and making the tax system fairer.

 

[Value Collector]

Please tell us what these measures are, and more importantly, pick up the phone to Joe Hockey and tell him, because he's bottled out on trying to reduce company tax avoidance.

Give me an example of a situation you wish to stop.

 

[Value Collector]

Also makes it harder to loophole your way like the rich in Australia to paying very low % rates of tax.

Not really, how would you go about valuing all the private business assets?

Companies would just depreciate assets to make there book value seem lower.

Also, would I end up getting massive tax bills just because my shares went up, even though they don't pay a dividend? That's not really fair, how would I pay it? And do I get a refund when them hares go down?

 

[SirRumpole]

Give me an example of a situation you wish to stop.

I mentioned offshore profit shifting by companies and you said that there are measures that could be taken to stop this, so what are they ?

 

[Value Collector]

I mentioned offshore profit shifting by companies and you said that there are measures that could be taken to stop this, so what are they ?

And I said give me an example of the "offshore profit shifting" and I will tell you.

 

[SirRumpole]

And I said give me an example of the "offshore profit shifting" and I will tell you.

http://www.smh.com.au/business/ato-chief-warns-on-profit-shifting-20130626-2oxlw.html

 

[Value Collector]

http://www.smh.com.au/business/ato-chief-warns-on-profit-shifting-20130626-2oxlw.html

If it can be shown that a local company is setting up an offshore agency simply to avoid tax, this could be shown to be tax avoidance and the company could be prosecuted accordingly. Just start testing some big name Aussie companies that are involved and hit them hard as a deterrent.

Even still though the companies revenues would still be generating tax dollars because their employees will be paying tax, they will be paying gst, land taxes, and spending dollars in other ways that generate taxes.

But yes, we could outlaw (I think they already are outlawed) schemes designed to avoid tax.

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I see nothing wrong with a company like apple using systems to raise the whole sale price that they supply their products to their Australian division to keep some of the profits offshore, Because the biggest chunk of the profits are being generated offshore.

When they take a bunch of materials and build a phone or an ipad, they are generating a lot of value, Having a structure that shifts that value to another entity, and then that entity supplies that ipad or iphone to their retail arm in Australia at a whole price rather than letting it flow through at the manufacture cost, does generate a lower profit for the retail arm, but that's ok because that retail arm wasn't responsible for the value generation in the first place.

 

[SirRumpole]

When they take a bunch of materials and build a phone or an ipad, they are generating a lot of value, Having a structure that shifts that value to another entity, and then that entity supplies that ipad or iphone to their retail arm in Australia at a whole price rather than letting it flow through at the manufacture cost, does generate a lower profit for the retail arm, but that's ok because that retail arm wasn't responsible for the value generation in the first place.

That's fine for the company, but if we as a country are just buying stuff from overseas, how are we earning the money to pay for it ? The minerals boom won't last forever as we have recently found out, so what's the substitute ?

 

[sydboy007]

If it can be shown that a local company is setting up an offshore agency simply to avoid tax, this could be shown to be tax avoidance and the company could be prosecuted accordingly. Just start testing some big name Aussie companies that are involved and hit them hard as a deterrent.

Even still though the companies revenues would still be generating tax dollars because their employees will be paying tax, they will be paying gst, land taxes, and spending dollars in other ways that generate taxes.

But yes, we could outlaw (I think they already are outlawed) schemes designed to avoid tax.

--------

I see nothing wrong with a company like apple using systems to raise the whole sale price that they supply their products to their Australian division to keep some of the profits offshore, Because the biggest chunk of the profits are being generated offshore.

When they take a bunch of materials and build a phone or an ipad, they are generating a lot of value, Having a structure that shifts that value to another entity, and then that entity supplies that ipad or iphone to their retail arm in Australia at a whole price rather than letting it flow through at the manufacture cost, does generate a lower profit for the retail arm, but that's ok because that retail arm wasn't responsible for the value generation in the first place.

How does a local specialist IT firm compete when they're paying full tax within Australia? Shouldn't there be at least some resemblance to paying a market rate for the various IP the likes of Apple and Google are charging? How doe sa smallish company like STW communications compete against Google or Yahoo where they can sell similar advertising and not pay local taxes?

A good step would be to force companies to have far easier to understand accounts. If even forensic accountants have trouble unearthing how the money is moving around within a company then there's something very wrong. How can an auditor sign off on it?

Then we have the story of Telstra's foxtel loan

http://www.smh.com.au/business/medi...ans-to-foxtel-questioned-20150215-13f3nb.html

I still can't quite grasp how this isn't a clear artificial transaction for tax avoidance.

Glencore has done similar with providing loans to Australian subsidiaries at inflated interest rate margins, and I'm sick of the mining sector counting royalties as taxes to try and make it look like they're paying a lot of tax. It's like an Airline treating staff as a tax, or a farmer treating the cost of seed as a tax.

I'm heartened today there's talk that super contributions might end up being taxed at marginal rates. That's a step towards reducing the regressive nature of super taxation. Super contribution concessions are forecast to cost the budget $22.3B by June 2018, a cost to the budget growing at roughly 7.8% a year, while the cost of concessionally taxing earnings within super funds will balloon to just shy of $27B by June 2018, a growth rate of 13.5% a year. What other Govt programs have costs escalating like this? We're talking about revenue sums that would pay for our current outlays on medicare AND defence AND unemployment benefits. yes yes, the savings would reduce if you tax it more heavily, but the savings would still be much higher than anything the Govt has currently proposed, and definitely would pass the pub fair go sniff test.

Wrap it up with a focus on the $20B in fees charged for the system with a target of halving them in 5 years. Argue that these reductions will help to reduce the cost of the tax increase. Force super funds to break out fees charged and present them as a $ figure, rather than hidden away from site as is currently the way. Someone with a $100K balance sees a fee of $450 on their semi annual statement will hopefully start to question what they're getting for it.

Throw in some tightening up on CGT and NG, and while the budget wont be balanced, it will certainly give us the breathing space to stop the ratings agencies downgrading us and when that happens we'll then have drastic austerity measures forced upon us.

 

[Value Collector]

That's fine for the company, but if we as a country are just buying stuff from overseas, how are we earning the money to pay for it ? The minerals boom won't last forever as we have recently found out, so what's the substitute ?

that's up to us to find things to export over seas, Mining, tourism, food, media content, financial services, health care products whatever you can think of. the world is your oyster so to speak.

I am a glass half full kinda guy, I see a world of opportunity, and am actively investing in it.

I don't believe in mercantilism, I think the global economy is a great thing.

 

[SirRumpole]

that's up to us to find things to export over seas, Mining, tourism, food, media content, financial services, health care products whatever you can think of. the world is your oyster so to speak.

I am a glass half full kinda guy, I see a world of opportunity, and am actively investing in it.

I don't believe in mercantilism, I think the global economy is a great thing.

Realistically, we are in a pool full of sharks that are a lot bigger than us. There may be a few niche markets out there, but nothing that is going to employ large numbers of people, and you have already promoted production going offshore, so what is there to sell ?

In the end, the only market we can depend on is our own. We should satisfy that first before we start thinking we can take on the big boys.

 

[Value Collector]

How does a local specialist IT firm compete when they're paying full tax within Australia? Shouldn't there be at least some resemblance to paying a market rate for the various IP the likes of Apple and Google are charging? .

The company tax doesn't stop them competing, they compete all year, make a profit if they can, then then pay a tax on the profit.

What can make them less competitive is the GST, sales taxes etc, obviously a foreign company gets a 10% head start if the are not charging gst. because they have no presence in Australia.

How doe sa smallish company like STW communications compete against Google or Yahoo where they can sell similar advertising and not pay local taxes?

it's only really the gst that is putting them behind, does google charge gst? If they do I can't see a tax based competitive advantage.

I'm sick of the mining sector counting royalties as taxes to try and make it look like they're paying a lot of tax. It's like an Airline treating staff as a tax, or a farmer treating the cost of seed as a tax.

Royalties on mining are a bit like a farmer having to buy water rights, it is really a tax. I don't see miners complaining about royalties, they accept them, it's just when the media of politicians try to make out that mining companies are making unfair amounts of money that they point out that huge amounts of revenues end up in government coffers already.


The government collects enough tax already, they just have to ensure people aren't avoiding the tax already in place and then stop wasting it.

 

[Value Collector]

There may be a few niche markets out there, but nothing that is going to employ large numbers of people.

We have a pretty low unemployment rate, and a global "niche" market is a massive thing for a country our size.

But we don't need to focus on big things, we can get thousands of niche businesses, serving the globe.

and you have already promoted production going offshore, so what is there to sell ?

Sorry, where did I say that?

I don't have a problem with producing things off shore, but I haven't "promoted" it.

In the end, the only market we can depend on is our own. We should satisfy that first before we start thinking we can take on the big boys

Serving ourselves involves taking on the big boys? it would mean we have to produce a better phone than the Iphone, better TVs than samsung, better game consoles than sony, better movies than Hollywood etc.

We should import things it makes sense to import, and focus on our strengths.

and also encourage both corporations and Individuals to invest overseas, there is nothing stopping Aussies buying shares in Apple, Google, Coca cola etc.

I for one bought a chunk of The Walt Disney company, that's going to bring revenue back to Australia.