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The Forum > Article Comments > Lowering tax can be an export industry > Comments

Lowering tax can be an export industry : Comments

By John McRobert, published 1/3/2012

Less can be more when the rest of the world is raising its tax rates.

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It is nice that John McRobert's son and partner have settled in Ireland, but it seems to have escaped his attention that the Irish economy is recovering from a terrible battering thanks to the GFC and a property bubble. Any Irish people who could get out have done so since the economic collapse. He does not say what his son does for a living but houses in Ireland are cheap. If they can get work there they will do well, and never mind the tax rate.

So much for his thesis

Although we could all do with lower taxes, for McRobert to rescue his case he would have to look at immigrants who settle here, instead of just those educated here who go overseas. He should also bear in mind that the boat people are a tiny portion of the total (less than 3 per cent) in any one year. The bulk of the remainder (180,000 a year about) are skilled immigrants, many coming from the low-tax countries which he praises.

Certainly Singapore and Hong Kong have done well, just as Australia has done well, because they have British-style rule of law - whether there is much difference in performance at the moment, and whether that is due to tax are entirely open questions. The Aus jurisdiction is entirely diffent in that we also pride outselves on social justice, unfair dismissal laws and the fairwork act.

So what is due to what? McRobert needs to do some more analysis.
Posted by Curmudgeon, Thursday, 1 March 2012 10:40:25 AM
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It's true that low taxes and a very light regulatory touch are good for the economy, prosperity and employment. Hong Kong and Singapore are proof positive.

What is not so sure is that a tax of 2% on spending/exchange is the best option as it has the potential to be hugely distorting. Removing income, company and capital gains taxes would hugely beneficial, but retaining a VAT/GST would have fewer distortions and a fairer outcome.
Posted by DavidL, Thursday, 1 March 2012 12:32:02 PM
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The Irish economic miracle was created by Ireland investing in her own people and their better ideas and low taxes; then killed by allowing debt laden foreign property speculators into the country and the property market, which then created an over supply and a property bubble burst.
Had the govt allowed the market to dictate the outcome the speculators and the banks that underwrote their speculation could have been allowed to go under. That could have and should have been followed by nationalizing the banks.
Instead they privatized profit and nationalized debt; hence the near terminal nature of their current economy.
We for our own part need tax reform and vast simplification. which if well thought through and intelligently designed, will allow corp Australia to recoup the current 7% of the bottom line, currently ripped out by compliance costs. We need as never before to broaden our tax base and downsize the public service; given, we confront a future which could include a virtual Great Depression in Europe; by as soon as 2016, with all that means for the Chinese economy and Australia.
We should be urgently diversifying and broadening our market base, with alacrity; given the huge and largely untapped by us, Indian market on our front door.
There are no cogent grounds for us to fatuously emulate the latter day Irish economic example or the current Greek one; given, we can choose a single stand alone vastly simplified expenditure tax, which if implemented, would be the most equitable and fairest tax system of all! And a boost to our domestic economy, when we need it the most!
Posted by Rhrosty, Friday, 9 March 2012 4:55:11 PM
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When the numbers stack up and say that one third of one percent collected as an expenditure tax, would replace PAYE, one wonders why we still retain PAYE?
Perhaps the interests of tax practitioners and or the ATO take precedence over the national interest?
Vast simplification of our tax system would allow an unavoidable expenditure tax; set at around 4.8%, to replace our current mind numbingly complex tax system, with a 40,000 page tax act and a loophole on every page, and, increase the total tax take; from all sources, by around 100 billion per!
If we would just grasp the nettle and get it done, we could conceivably protect the interests of tax practitioners and the ATO, by the simultaneous creation of a brand new peoples bank.
Which could be franchised and tasked with supplying venture capital or underwriting our better ideas; and or, those who create them! And a much more productive use of the number crunching abilities of those our proposed reform, would displace?
As well as that, we can and should use the multitude of advantages we currently own; to create and reticulate the world's cheapest carbon free or neutral electrical energy! The poeples' power!
We need to do this; and we can, to attract to these shores, the world's foremost high tech industries; given, this is where our clean green future and prosperity lies! Rhrosty.
Posted by Rhrosty, Monday, 26 March 2012 5:52:06 PM
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As an aside, an interesting American study, conducted by one of their more prestigious universities; apparently tracked the lives/careers/prospects of 300 economists over a period of 20 years.
Their general economic predictions as a body, were allegedly no more successful or accurate than a dart throwing monkey.
As their individual profiles became more popular or well known, their predictive abilities declined?
Well, economic theory has never ever been an exact science; and indeed, seems to be one of the so-called "disciplines" able to almost completely and routinely ignore the immutable law of cause and effect?
Hence the boom and bust nature of most economies; save those like tiny Hong Kong, Singapore, South Korea and Taiwan, all of who seemed to have successfully kept foreign investors and their often onerous debt burdens from imposing their too much of their peculiar form of parasitical debt funded speculation on their respective economies?
But more so since the Asian economic crisis?
One doesn't put their hand back in the flame of economic destruction; once you've been burnt, unless of course you are a mindless economic Idealog; with a moribund mind; and, welded to a particular economic theory; like say thoroughly failed and disgraced trickle down theory or other equally extreme forms, of entirely exploitive enslaving capitalism?
Make no mistake, capitalism is arguably the only way to end or alleviate poverty in all its forms and guises; but only if it is cooperative and welded to genuine profit sharing; and much more adequate reward for equal effort.
When the day finally dawns, when every person on the factory or shop floor has a vested interest in the success or failure of the firm their will be far fewer failures or monolithic structures; that grow to big to be allowed to fail? Rhrosty.
Posted by Rhrosty, Sunday, 1 April 2012 10:48:35 AM
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