Ask yourself, do we really need man made complexity, and pay through the proverbial just to untangle what shouldn't exist!

And just hanging on to it as seems the want of the ATO and most tax practices, (powerful people) is all that allows avoidance on a hitherto unknown scale.

On average company tax is 1-4% of the gross, as paid by most corporations? With 40% of our guest transnationals paying no company tax to anyone, yet still apparently using taxpayer funded facilities to do business here?

And only possible because we remained welded to the present system and the money it generates for some very "clever" people.

When one considers that only around 3 taxes raise most of our revenue, and or that only around a dozen or so corporation pay all our corporate tax, then it's time to act!

I mean if off-shoring only ever increased your tax bill, what CEO in his or her right mind would chose that option!?

If our current tax take is as reported, just 4% of the GNP, and if the GNP is in fact a "fair" representation of our combined total spend?

Then a 5% stand alone and completely unavoidable expenditure tax of just 5%, would raise more NET revenue; somewhere between 75-100 billions more, than the current convoluted complexity!?

And collected via the banks and transferred electronically overnight, to deal out both the ATO, and all those patently unproductive and parasitical tax practices; as well as their considerable SERVICE COSTS?

And only necessary, due solely to man made complexity!

Time the 95% of corporate Australia, found that off-shoring not only didn't save them money, but cost more; whereas, those still operating as genuine Australian entities, could put their tax compliance money, [7% averaged,] back in their hip pocket.

Given under the proposed simplicity, there would no longer be necessary for genuinely Australian based entities to fork out any compliance money whatsoever!

And an expenditure tax is not a turnover tax as claimed, in as much it just doesn't tax deposits, or money as it is banked!
Rhrosty.

removing dividend imputation is not in the nation's interest.
1. companies maintain higher share prices through dividend imputation to australians, but to have the tax credits it means they have to pay the tax, so it acts as an incentive to reduce tax minimisation strategies
2. those in the business community pushing for the change are multinationals with foreign based institutional investors who do not benefit from imputation, but would benefit more from further tax minimisation strategies
3. removing dividend imputation may encourage firms to undertake activity overseas, hence less jobs for australians
4. dividend imputation forces discipline in capital spending
5. dividend imputation puts pressure on companies to bring profits back to Australia rather than implementing aggressive price transfer arrangements

Social Democrats should fight to keep dividend imputation for these reasons and not become lackeys for the wall street institutional investor who just want to plunder our economy

A few points:

a) I'm not suggesting we cut Company Tax with the revenue gained from cutting Dividend Imputation. In fact I'm saying lift Company Tax in line with either the US, Japan or France.

b) There's over $20 billion at stake

c) We have to weight the benefits and drawbacks to winding back Dividend Imputation; But $20 billion a year for infrastructures, services, welfare, social wage - seems pretty good to me

d) elsewhere I've argued for a *gradual* rescission of dividend imputation - and that might make sense so as we can respond to and gauge the effect on the economy.

these are the alternatives have superannuation taxed at three rates, 8%, 18% and 28%, not administratively hard those on 19% tax rate have super taxed at 8% (instead of 15%), those on 32.5% and 37% rate are taxed at 18% (instead of 15%) and those on 45% are taxed at 28% instead of 15%. All are taxed at a concessional rate, so very little incentive to change investment, tax gained will be more than what occurs , better than taxing at marginal tax rate because that could lead to changed behaviour and revenue loss elsewhere. The employer when sending the payments to the super fund advises the fund the highest tax rate applying to the employee.

move negative gearing to neutral gearing, so that expenses from the asset can be written off against income from the asset but not against other passive income. provide a 5 year transition period where a cap of $3000/yr of expenses can be written off against passive income.

tax super withdrawals above $50 000/yr at appropriate marginal tax rate, remove the Costello blunder

If we just removed the complexity and the costs that they incur, we wouldn't need negative gearing, nor special treatment of some super!

Why should someone paying the top level of tax, given a top level income, be able to effectively reduce their tax by around 33 cents in the dollar, to just 15 cents in the dollar!

Shouldn't a great big pay packet be enough without expecting working class families to somehow subsidize the fat cats tax liabilities?

If we just taxed expenditure, then those receiving a current tax minimization benefit, wouldn't need it, given we would have handed back the no longer necessary tax compliance money.

And given an unavoidable expenditure tax would be unavoidable, dividends would have already had a tax component leveled against them; and for all practical purposes, they would then be treated as fully franked, until you started to spend the money.

Which is what happens now, given the beneficiaries of your spending will have several taxes charged against their income!

And let's not forget, tax compliance costs are passed on wherever possible, and therefore become a cascading cost/economic brake throughout the supply chain!

One just doesn't need to be an Einstein to understand, that removing the treasured and costly complexity, removes the opportunities to avoid tax.

And sharp practice would simply bulk out the tax bill not minimize it, if all claimed expenditure resulted in some unavoidable tax!

5% may not seem much, but some economists are on the public record, (during the Hawke era) claiming that one third of one percent collected as a transaction tax, would replace PAYE.

Others suggest that a 2% transaction tax would replace all tax!

However, a transactions tax may be both regressive and or tax turnover?

However, an unavoidable expenditure tax couldn't be avoided, even by tax avoiding multinationals, and all those (95% of corporate Australia) who've off shored their operations to avoid tax; or those who've set up subsidiaries in so called tax havens!

Which would then work against them and the higher levels of expenditure that then mandates!
Rhrosty.

tristan there is not $20 billion at stake, once you remove dividend imputation those companies that had fully franked dividends will employ aggressive taxation minimisation strategies, with dividend imputation they have to pay sufficient tax in australia to flow the credits to the individuals who receive the dividends. the profile of the mix of investors will change, the proportion of overseas investors increase, those residual aussies with the capacity will either employ different taxation strategies themselves or alter their investment