The future of energy generation and storage

[SirRumpole]

Aren't you the one that was saying a few months back that companies should only be allowed carried forward losses for a couple of years instead of until they are eliminated by profits. Your attitude seemed to be that if a company couldn't get to profitability within a few years they should go out of business, even though things like carried forward losses are just simply a means of not taxing companies on profits that haven't yet exceeded their accumulated losses.

Thinking about that, I now believe that companies should be able to write off all their losses, but not in one go, but at a maximum rate of say 10% per year. ie they could only reduce their profit by 10% a year from accumulated losses. That would get them paying tax each year while still allowing writing off losses.

 

[SirRumpole]

It was the chairman of the Bank of Japan in the early 50s who is quoted as saying (paraphrasing) that international division of labour made it meaningless to develop a local car industry. So the local makers made pommy and french cars under licence until they learned how do it themselves.

Yep, very clever of them.

 

[Smurf1976]

Regarding previous discussion about productivity, a relevant question is “of what?”

Broadly speaking there’s an inverse correlation between labour productivity and plant productivity in the industry at present.

Company A has pursued labour productivity most certainly and let’s just say they’ve now got a level of plant reliability and productivity that others would find embarrassingly low.

Company B hasn’t worried so much about labour productivity, seeing that as a relatively minor cost compared to the need to maintain plant reliability and productivity.

The lights have stayed on because thus far those in the “B” category have been able to step up and generate when those in the “A” category have yet another problem which brings operations to a halt.

Those in the “B” category are however all too aware that they won’t be able to cope when the inevitable happens and the others fall in a heap when demand is higher than their capacity. It’s pure luck that the problems have been fortunately timed thus far.

I won’t name names but one company in particular seems to have a lot of issues technically in recent times. They’re making big profits however.

 

[bellenuit]

Thinking about that, I now believe that companies should be able to write off all their losses, but not in one go, but at a maximum rate of say 10% per year. ie they could only reduce their profit by 10% a year from accumulated losses. That would get them paying tax each year while still allowing writing off losses.

It could still drive them out of business.

If they have accumulated losses of $10M and then the next year they make a profit (before applying carried forward losses) of $2M, then by your system they can apply just $1M of accumulated losses. So they will be taxed on $1M, which is $300K at 30%.

In general, it will be far better in the long run for the ATO to allow the company to become cumulatively profitable and survive rather than impose unjustifiable taxes on a start-up or company recovering from bad times. In the above example, if profit recovers by $1M per year, thus $2M, $3M, $4M and $5M,it will only be 4 years after the non-profitable year(s) before the company is now fully profitable and paying tax on all profits. By your system they will be hit with taxes of $300K, $600K, $900K in those start-up or recovery years, even though they have not made a cumulative profit to date. Start-ups in particular need to invest in themselves. Having to pay taxes on income they haven't yet earned is going to kill most start-ups.

Let the greedy government wait until the company has earned more than they have spent before applying an unnecessary impost.

 

[SirRumpole]

Having to pay taxes on income they haven't yet earned is going to kill most start-ups.

So you give startups a tax holiday.

I wouldn't call a company like Qantas a "startup".

How long since they paid tax ?

 

[bellenuit]

So you give startups a tax holiday.

Do you not even understand the basics of business. A start-up that hasn't made a cumulative profit since starting up is not getting a tax holiday. It's costs to date still exceeds the revenue it has earned to date.

I wouldn't call a company like Qantas a "startup".

Neither would I. It is a company that went through a bad time but has now been turned around.

How long since they paid tax ?

2017-2018, the tax year just ended, is the first time it paid tax since 2009, although it probably won't be physically paid until the due date. It has finally paid off its cumulative losses.

 

[luutzu]

Do you not even understand the basics of business. A start-up that hasn't made a cumulative profit since starting up is not getting a tax holiday. It's costs to date still exceeds the revenue it has earned to date.

Neither would I. It is a company that went through a bad time but has now been turned around.

2017-2018, the tax year just ended, is the first time it paid tax since 2009, although it probably won't be physically paid until the due date. It has finally paid off its cumulative losses.

So how long will they continue paying tax?

Oil price already risen, forecast to rise higher rather than lower.

There's possible crackdown on certain practises JetStar engages in. Such as using cheap overseas flight attendants on domestic flights.

Then there's the credit crunch, property collapse, tourism bye bye.

 

[luutzu]

So you give startups a tax holiday.

I wouldn't call a company like Qantas a "startup".

How long since they paid tax ?

Know how Socialism claims to protect society? What does Capitalism protect? Capitalists.

And for the bonus round... one of them is lying.

 

[SirRumpole]

Do you not even understand the basics of business. A start-up that hasn't made a cumulative profit since starting up is not getting a tax holiday. It's costs to date still exceeds the revenue it has earned to date.

One of the basics of business is that shareholders take a risk and have to bear some of the downsides as well as the upside. If a business is profitable currently they should be paying some tax, even if they can reduce it somewhat from previous losses. The government still needs revenue for services and infrastructure that business requires.

 

[Tisme]

Thinking about that, I now believe that companies should be able to write off all their losses, but not in one go, but at a maximum rate of say 10% per year. ie they could only reduce their profit by 10% a year from accumulated losses. That would get them paying tax each year while still allowing writing off losses.

The loss made by the company is a profit made by another . The net tax take remains the same, so the tax on the 90% is a windfall take and crippling to the business.

 

[luutzu]

The loss made by the company is a profit made by another . The net tax take remains the same, so the tax on the 90% is a windfall take and crippling to the business.

Not necessarily the case though.

One's expense is another's revenue. But revenue doesn't always equal profit. Just ask practically all major corporations who barely made any profit to tax much from.

 

[SirRumpole]

The loss made by the company is a profit made by another .

The business that makes the profit may not pay tax in our juridisction so the net tax may be negative.

 

[luutzu]

One of the basics of business is that shareholders take a risk and have to bear some of the downsides as well as the upside. If a business is profitable currently they should be paying some tax, even if they can reduce it somewhat from previous losses. The government still needs revenue for services and infrastructure that business requires.

That's what personal income and consumption taxes are for.

That and speeding tickets, fines and nasty letters from Centrelink.

 

[Tisme]

The business that makes the profit may not pay tax in our juridisction so the net tax may be negative.

But the net is the same, balance of trade is not the concern local business. If you tax based on balance of trade we would have zero business.

 

[Value Collector]

Yea, but that doesn't necessarily mean we contribute mainly with the ores and minerals. Those will run out one day.

There's quite a few ingenius OZ invention and tech. Such as that wifi/bluetooth patent from the CSIRO. There's a few biotech that I've heard of. Just that we as a country tend not to develop and specialise on them... leaving the few to stand all by themselves. Then soon enough they either die, gets taken over or move offshore to gain more talent, bigger market, additional scale etc.

You know the part of Adam smiths “wealth of nations” where he says it would be silly for America to invest secondary industries when they hadn’t yet exhausted their ability to invest into primary industries such as agriculture? I think a similar thing applies here.

Sure, in a few hundred (or thousand) years we might have depleted our mining ability, but that doesn’t mean that’s not he best use of our capital and labour today.

And we don’t have to limit ourselves to mining, eg tourism, agriculture, services and many other industries can be done, we just done have to have the idea that we need our economy to be fully intergrated to prosper, and as a nation we can invest overseas also, if that’s the best way to deploy capital into a certain industry.

 

[Value Collector]

"Advantages" don't just happen, at least in a country of our size. They need to be created and that includes keeping competition out until the home grown industries are strong enough to compete.

That's how all the world's big manufacturers started.

How exactly would you want this happening?

Would you want a wind turbine 100% manufactured here? Eg all 30,000 or so parts?

Or are you happy with imported parts as long as the “assembly plant” is here?

Do we force the companies that are willing to invest in wind power plants to buy the local equipment? What if that scares them off developing a project at all?

Would you be happy with less total number of projects reaching completion? Or should the focus just be on getting as many renewable projects funded and completed regardless of if the components are imported?

I just see that any law or rule that forced project developers into buying only from local suppliers would have a net negative effect.

 

[luutzu]

You know the part of Adam smiths “wealth of nations” where he says it would be silly for America to invest secondary industries when they hadn’t yet exhausted their ability to invest into primary industries such as agriculture? I think a similar thing applies here.

Sure, in a few hundred (or thousand) years we might have depleted our mining ability, but that doesn’t mean that’s not he best use of our capital and labour today.

And we don’t have to limit ourselves to mining, eg tourism, agriculture, services and many other industries can be done, we just done have to have the idea that we need our economy to be fully intergrated to prosper, and as a nation we can invest overseas also, if that’s the best way to deploy capital into a certain industry.

No I don't know because I haven't read it, all, yet

I know what you're saying... and Australia is an incredibly rich, and lucky, country. Just that the wealth doesn't trickle down to a fairly large chunk of the population.

The reason, I think, is because we have replaced our manufacturing jobs with... bugger all really.

There's the automation in mining and mineral exploration. The mainly flight by night kind of operations. Cutting of funding to higher education to grow that future innovative workforce.

So for most whose education and training doesn't easily transfer them to more specialised work, removing that manufacturing base will create generations of "unskilled" trades, "redundant" workers who either take an application with Uber or at Bunnings stacking stuff.

For those with capital... it's a lot easier to move their stash to where return is highest, more immediate. That's fair enough.

But I think that as a national strategy, or whatever you'd call it... often the best and most profitable investment are long-term, probably illogical and hopeless kind of capital waste.

It's a bit like a parent investing in their kids education.

The little bastards might end up learning nothing, should probably be more useful working at a coal mine or Maccas the moment they can get a tax file number... But if given enough guidance, good books... might end up being an investor or something

Or take two examples I read... When Thomas Jefferson decided to buy the Louisiana estates from Napoleon, many call him an idiot who will send the country broke. Same with some other dude's purchase of Alaska from the Tsar of Russia.

I mean, if those two investment weren't made, how will the US arms industry thrive and enable it to liberate the world to kingdom come?

 

[Value Collector]

One of the basics of business is that shareholders take a risk and have to bear some of the downsides as well as the upside. If a business is profitable currently they should be paying some tax, even if they can reduce it somewhat from previous losses. The government still needs revenue for services and infrastructure that business requires.

How about a company just pay tax once they have made an actual profit,

Eg, if they lose $10 Million a year for the first 5 years, ($50 Million loss) then we don’t charge them taxes until they have made that $50 million loss back.

Seems pretty simple to me.

 

[luutzu]

But the net is the same, balance of trade is not the concern local business. If you tax based on balance of trade we would have zero business.

No, there would still be local businesses. Employing local labour and paying taxes locally.

Most business entrepreneurs, despite what we're told, do not stop working or stop creating a business if the tax is at x or y%. You'd only care about that after you've made money and needed a fifth estate by the snowy mountain for completely legitimate tax-deductible business meetings.

Corporations are becoming too big they no longer just exploit the brown and black and yellow people "over there". They've become what some egghead call a virtual global Senate supplanting democracy like all upper houses democracies over.

 

[Value Collector]

No I don't know because I haven't read it, all, yet

I know what you're saying... and Australia is an incredibly rich, and lucky, country. Just that the wealth doesn't trickle down to a fairly large chunk of the population.

The reason, I think, is because we have replaced our manufacturing jobs with... bugger all really.

There's the automation in mining and mineral exploration. The mainly flight by night kind of operations. Cutting of funding to higher education to grow that future innovative workforce.

So for most whose education and training doesn't easily transfer them to more specialised work, removing that manufacturing base will create generations of "unskilled" trades, "redundant" workers who either take an application with Uber or at Bunnings stacking stuff.

For those with capital... it's a lot easier to move their stash to where return is highest, more immediate. That's fair enough.

But I think that as a national strategy, or whatever you'd call it... often the best and most profitable investment are long-term, probably illogical and hopeless kind of capital waste.

It's a bit like a parent investing in their kids education.

The little bastards might end up learning nothing, should probably be more useful working at a coal mine or Maccas the moment they can get a tax file number... But if given enough guidance, good books... might end up being an investor or something

Or take two examples I read... When Thomas Jefferson decided to buy the Louisiana estates from Napoleon, many call him an idiot who will send the country broke. Same with some other dude's purchase of Alaska from the Tsar of Russia.

I mean, if those two investment weren't made, how will the US arms industry thrive and enable it to liberate the world to kingdom come?

We have people complaining that our mines, farms, infrastructure and even branded companies are being bought by over seas investors, which is a clear sign not enough local capital is being invested in these areas.

But then these same people want to divert our small amount of capital away from these areas and into “pie in the sky” projects.

I am a firm believer that if local investors put more capital into existing industries which require capital, the whole economy would do better and eventually capital saturation would mean capital would naturally flow into other areas.