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The Forum > Article Comments > Get off Google’s tail > Comments

Get off Google’s tail : Comments

By Jonathan J. Ariel, published 28/5/2012

Don’t blame the multinationals, they didn’t write the tax code.

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Of course the big boys are not paying their share because the tax system is a fraud based on a fallacy. The fallacy is the theory that Profit can be consistently and accurately measured and therefore used as a basis for tax, the fraud is pretending that the wealth is a fixed cake which can be shared 'equitably' by a 'wise' government which uses taxes from the less-numerous wealth creators to benefit the more-numerous tax dependents (it's a numbers game played under corrupt tax rules). This tired old Marxist tax system is like a clapped-out car which has long passed its use-by date. We need a current, fuel-efficient model. Go to any number of tax accountants and they will all come up with a different answer of taxable profit for your year's work, and charge handsomely for their services. But the ONLY time anything can be valued in monetary terms, is at the moment of exchange of ownership, the moment of trade, when the Buyer and the Seller agree a price, whether that be in dollars, euros, drachmas or yen. That is the ONLY thing which can be accurately measured and that is the ONLY thing which should be taxed. When the figures are run, a simple Spending tax at 2% would be enough to run government and allow productivity, and the cake, to grow as people spend more time producing real wealth and less time fighting off a horde of tax inspectors for the right to keep most of their hard-earned wealth. Even Google would be happy to pay as there is a defacto tax cost in employing accountants and lawyers to keep their taxes within the ever changing, multitudinous, punitive tax laws which strangle commerce and industry across the western world today.
Posted by John McRobert, Monday, 28 May 2012 10:22:49 AM
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This is a big topic for a short article to cover adequately. In fact, there is only room for a couple of soundbites, a quick appeal to "working families" (or their equivalent here, the "hard working PAYG taxpaying Australian") and a bit of half-hearted indignation.

This has been a government - and business - challenge ever since Moses played in the back pocket for Collingwood. And with the internet, is now further away from being resolved than ever. Principally because the rules that governed transfer pricing were designed for a world of physical goods, and geographically fixed-location services. Even then, it took many decades of discussions, threats, embargos, trade wars, bilateral treaties and general confusion to arrive at the present set-up. And even after all that, there remain these places called tax havens dotted around the world.

And why not? When Ireland went through its "Celtic Tiger" phase, one of its engines-of-growth was the offer to multinational businesses of favourable tax treatment. Tax holidays were commonplace. Many technology companies took advantage of these. Nobody whinged much.

Now there's the internet. Google is a good example of a modern business that can operate perfectly with no fixed abode... for its products, that is. Which are universal, in that, being internet-based, they know no borders. It makes no difference, in product terms, which country records your keywords and raises your invoice. It's all done by computers... somewhere. Heck, the computer that actually "produces" that invoice probably only exists virtually, so you couldn't even point to it and say "it was that one".

On the other side of the equation, in the non-virtual world, what Google does is to hire a bunch of really smart people in various countries to develop software. Australia has a few hundred such pointy-heads, who are paid here, pay their taxes here, buy goods and services here and - in many respects - are just like you and me.

We should start to worry, in my view, when these jobs can no longer be filled by Australians, should other countries develop a population with pointier heads than ours..
Posted by Pericles, Monday, 28 May 2012 10:55:29 AM
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I agree with most of what John McRoberts says. He is right on the money.
However, even though we might well run the nation's business with a 2% transfer tax, we would likely be left with a grab bag of state taxes and council imposts; and indeed, a level of residual complexity, that could be completely jettisoned with a higher expenditure tax.
Moreover, an expenditure tax set at around 4.8%, can be marginally varied region by region to alone address either inflation or stagnation; meaning, interest rates could be progressively lowered until they reached record lows, with all that would do for manufacturing and export industries!
The business community would be able to pocket the current compliance costs and improve the bottom line by around 7% initially and a further 30% with the simultaneous repeal of all other taxes!
And, household disposals would also be improved by around 25%; meaning we'd also be able to introduce a 15% non contributory super as well.
We currently face a shrinking pool of tax payers supporting a growing pool of aged welfare recipients.
The jettisoning of the current complexity in favour of a single stand alone expenditure tax, will grow with the economy, or GDP. And a non-contributory 15% super scheme supported by mainly bonds, will ensure retirement funds are both safer and available in retirement! And indeed, work here at home, as funds accumulate?
At the moment many entities can completely avoid tax by ploughing profits back into business; and then collecting it later as capital gains, with a once only 15% impost attached to it? In the interim, others carry the business's share of our combined tax burden!
An outcome which is hardly fair! It's time the big tax avoiding multinationals paid their fair share!
Rhrosty.
Posted by Rhrosty, Monday, 28 May 2012 4:20:44 PM
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I don't pretend for a moment to follow your logic, Rhosty. But a couple of soundbites got through to me.

>>...meaning, interest rates could be progressively lowered until they reached record lows...<<

How would this be different from the "record low" interest rates that Japan enjoyed for twenty years or so? They seemed to think it was a pretty bad thing, for some reason - any thoughts on how our "record low interest rates" might be somehow a good thing?

>>...a non-contributory 15% super scheme supported by mainly bonds, will ensure retirement funds are both safer and available in retirement<<

For example, if you intend to support your retirement with bonds, I'm not sure how folk would react to having 15% of their income siphoned off into vehicles that are at "record low interest rates".

But perhaps I am puzzled because I have not fully understood what is involved. I know Wikipedia isn't the most useful reference resource for stuff like this, but their brief description is as follows:

"Expenditure tax: A direct, personal consumption tax may take the form of an expenditure tax or an income tax that deducts savings and investments. A direct consumption tax may be called an expenditure tax, a cash-flow tax, or a consumed-income tax and can be flat or progressive. Expenditure taxes have been briefly implemented in the past in India and Sri Lanka"

Do you have a particular scheme in mind?
Posted by Pericles, Monday, 28 May 2012 6:22:07 PM
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Pull the other one .The Multi-nationals greatly influence our Govts.They create from nothing most of the money to equal our increases in productivity + inflation.

They own us and we are their debt slaves. Why is the world consumed by so much debt when both parents work long hours for less pay
Posted by Arjay, Monday, 28 May 2012 9:06:59 PM
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Blimey! I wish everyone who commented would read the full argument for a 2% Spending tax before going off half cocked. Treasury rejected it when Pauline Hanson had the temerity to support it, but Treasury supposed (economists always suppose something) it was a Bank Transactions tax, a dreadful concept with which the 2% Tax has nothing in common. So the Treasury supposition was wrong and GIGO (Garbage In Garbage Out) ruled their rejection model.
It is amazing the following link still exists and it is recommended reading <http://www.gwb.com.au/gwb/news/tax/peter.html>.

If anyone is serious about fundamental tax reform, please contact me at <info@copyright.net.au> and I will send a pdf file of our Senate Submission regarding this.

Directors of the top accounting companies in the country have told me, separately and individually, 'McRobert, the 2% tax would work but don't bring it in until I retire. We live off complexity.' But at what cost to the economy and to the motivation factor of the producers in our community?

But if anyone who reads this does nothing to learn about the possibilities of a peaceful tax revolution, then what hope is there for a decent future.
Posted by John McRobert, Tuesday, 29 May 2012 9:10:00 AM
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