Yuyutsu “You mean criminalising holding bank accounts in other countries and travelling with foreign cash?”

You can't spend foreign cash in Australia. You must convert it and the converters then need to re-convert this cash back to Australian dollars, and when they do wouldn't they be paid electronically?
Foreign cash conversion is not a very significant part of the economy anyway.

Criminalising holding foreign bank accounts?
I mean not being able to make *domestic* economic transactions through foreign accounts.
If your foreign accounts exist in regard to foreign income, no problem.
(e.g. Olivia Newton-John earns royalties and concert income in Australia, America, Britain, etc.
Only her Australian income is relevant for this tax, so she'd have to conduct all her Australian economic activity through a domestic account. Her American and British income is irrelevant.)

If you don't make local transactions compulsory, *every* big business (the prime source of revenue) would conduct all their affairs through foreign accounts and pay *no* tax.

I don't see how a simple percentage tax would be “prohibitively complex” for anyone (especially compared with the existing requirements, especially for small business owners) or Pericles, why anyone wouldn't “really understood how it was calculated”.

The examples Pericles gave was of multiple taxes at differing rates.
Hardly comparable to a single tax at a fixed rate, is it?

rehctub, one way I suppose you could do this, is to incrementally replace one tax after another, gradually increasing the rate from a very low initial rate.
Tell the public, we're introducing this tax to eventually replace all taxes, but we want to see what the returns are first, by trialling just one replacement (to evaluate the comparable rates/revenue collected).
So first, tobacco tax goes.
Once you know the comparable rates-to-revenue required, you raise or lower the rate as needed, then you replace fuel tax (using the same expected rate-returns formula), then something else, and so on.

There's no task quite so complex, Shockadelic, as making something simple.

>>I don't see how a simple percentage tax would be “prohibitively complex” for anyone<<

On the surface, of course, you are absolutely correct. A single rate for "transactions" is a no-brainer.

Now all you need to do is to define a "transaction".

Let's assume for a moment that the principal target of this tax is those wicked financial institutions, as rehctub's article, um, articulates:

"...a tiny tax on financial speculation by investment banks, hedge funds and other finance institutions that would raise billions to tackle poverty and climate change, in Australia and overseas"

(We all know, don't we, that "poverty" and "climate change" wouldn't see a red cent of the new tax - but leaving that aside for the moment.)

The first level of "simplicity" would be to determine which transactions you tax at 0.005% (I'm quoting the article here) and which do you tax at some other figure, that enables you to "average 0.05 per cent" (another direct quote). That in itself is not going to be easy.

Of course, since the tax is on "financial speculation", we also need to work out what that covers. Would it include, for example, the selling of one block of shares and the purchase of another? Or the purchase of a hedging instrument, to limit downside exposure?

Almost certainly, right? And that's ok, because we don't do that stuff, do we.

But we are still heavily involved. Just consider the impact on our superannuation, in which Australians have so far collectively invested $1.4 trillion. Would the tax encourage fund managers to linger too long in a poor investment? Or discourage them from moving to more attractive alternative investments? Or will they just charge you more in fees, to make up the difference?

Don't forget, the intention of this tax is to "raise billions to tackle poverty and climate change", presumably in amounts in excess of those presently allocated.

Make absolutely no mistake. Whatever form a "simple" transaction tax takes, we, the consumers, the general public, are going to pay for it.

Dear Shockadelic,

<<You can't spend foreign cash in Australia.>>

What stops you?

Currently there is no special reason to do so, but with this new tax more people will transact with cash in general and foreign cash in particular (especially if due to increased demand there won't be enough Australian notes to go around). People will even start asking to receive their wages in cash, Australian or otherwise, or in silver/gold. There is no need even to convert it, just to look up the official rates on the internet.

<<I mean not being able to make *domestic* economic transactions through foreign accounts.
If your foreign accounts exist in regard to foreign income, no problem.>>

Great, so exporters will never repatriate their income, they will just use foreign visa cards and paypal accounts to order overseas goods by mail, enjoy their money when they travel overseas, take some back in cash and when they buy things in Australia or need to pay their employees, they will transfer the price/wages directly to the seller's/employee's overseas bank account.

<<I don't see how a simple percentage tax would be “prohibitively complex” for anyone>>

For simple, ordinary poor people it will be extremely frustrating to ear-mark money in the bank for different purposes and between family members. Those cents taken off whenever moving money between one's own accounts or of family members will create a mess. Then when money is transacted, lent and returned between friends and family, or paid for small services, endless fights will ensue about the correct sum and who is liable for the missing cents. Mis-calculation of those cents will often cause a 3-cent overdraft, which would either incur serious bank charges or cause failures to pay a bill.

Pericles Now all you need to do is to define a "transaction".

The transfer of currency between accounts.
Need a definition of “account”? Pur-lease!
How about the definitions already stated in tax and banking laws? OMG!

“which transactions you tax at 0.005% (I'm quoting the article here) and which do you tax at some other figure”

I wouldn't support that anyway. One tax only, one rate only.
And I'd prefer to rip the whole band aid off, rather than the piecemeal gradualism I mentioned before (that was a suggestion, but not a recommendation).

“Would it include, for example, the selling of one block of shares and the purchase of another? Or the purchase of a hedging instrument, to limit downside exposure?”

If that involved the transfer of currency between accounts, yes.

“Would the tax encourage fund managers to linger too long in a poor investment?”

Don't they do that already? Buy and hold, buy and hold, buy and hold.

“Don't forget, the intention of this tax is to "raise billions to tackle poverty and climate change”

Um, no. It's intention is to simplify the tax system. As far as I, and most single tax advocates, are concerned.

“we, the consumers, the general public, are going to pay for it.”

And this differs from the current reality how?
You don't think all the taxes businesses pay aren't included in the shelf price?

Yuyutsu “Me:<<You can't spend foreign cash in Australia.>>

Y: “What stops you?”

Ever heard of *legal* tender? There may be no official prohibition, but just try it and see how far you get.
“Yes, Jenny, the know the milk is $1.95 in Australian dollars, but I just checked the exchange rate for Thai baht and....”

“more people will transact with cash in general”

And they will *withdraw* it from an account?
The business will *deposit* most of it in a bank?
Or will the local supermarket keep it's daily takings of $17,000 cash in the loading dock?

“and foreign cash in particular”

Not if it's explicitly prohibited in law, and it will be.

“exporters will never repatriate their income”

No the seller is *domestic*, so any income they receive is “domestic” and would need to be paid into an Australian account.

“when they buy things in Australia or need to pay their employees”

They would need to withdraw or deposit using only domestic accounts.

“Those cents taken off whenever moving money between one's own accounts or of family members will create a mess”
“Mis-calculation of those cents will often cause a 3-cent overdraft”

If the tax is calculated *prior* to transaction approval, the tax amount will already be calculated and not available for use.
If you try to transfer more than “amount + tax” the transaction will be denied.
The tax owed will not show in your available balance. No confusion at all.

Your family's banking affairs are your own decision.
If you trust each other, you could do all your transactions through *one* account if you wish. Why don't you trust them?
If you want independence from your family, there is a price to pay for that.

“endless fights will ensue about the correct sum and who is liable for the missing cents”

Only if your family and friends are stupid and forget they get taxed for every transaction.
Stop making so many damn transactions *between* accounts!

No need to get your knickers in a twist, Shockadelic.

>>The transfer of currency between accounts.
Need a definition of “account”? Pur-lease!
How about the definitions already stated in tax and banking laws? OMG!<<

It would seem that you do not agree with the Robin Hood Tax that rehctub used as his example.

Fair enough. But you haven't been particularly forthcoming with an alternative - except, of course, that it is to be a single rate. For all transactions. Whatever their size. So long as it is "between accounts". In Australia.

And you also are aware of the most important part...

>>You don't think all the taxes businesses pay aren't included in the shelf price?<<

Businesses don't pay taxes. We do.

So given that any tax will be passed on to us all via our consumption, would it be fair to say that any change in the taxation system will affect us all, in direct proportion to the volume of goods and services we consume. If that isn't your contention. I'd be interested to hear how else it would work.

But what none of the commentators has even attempted to work out is how quickly behaviours would change as a result of the new regime. Nor have any of the promoters, who run for cover under a shower of platitudes each time they mention the topic.

Since every transaction in Australia would be taxed at a percentage of its face value, it would make sense for the Banks to simply outsource their high-value transactions overseas. There would be no shortage of offers, all pitched slightly lower than the going tax rate. Because that's what businesses do.

Any thoughts on how you might solve that one, Shockadelic?