Michael Pascoe, associate editor of Eureka Report, writes:
business lobby has bought into two major public policy issues this year
– IR and tax reform – yet by business’ own hand, it has little
credibility in discussing either.
Tax first. Helped by the
legal industry and vast reserves of cash, big business operates in a
different tax system from the rest of the population. Their’s is a
system with plenty of smoke and mirrors and a much more pliable
Australian Tax Office.
At the extreme end, what business gets
away with reads like the invention of Lewis Carroll. I’m not talking
here (well, not yet anyway) of electrical equipment manufacturers
setting up sham insurance deals on tropical islands, or asbestos
sheeting companies dubiously moving nominal headquarters to the
Netherlands. No, the most extreme rorting of our taxation system at
present is being undertaken by the likes of Westpac and St George and
has been carried out previously by Telstra, the Commonwealth Bank and
numerous other “blue chips”. And it’s all done with the ATO’s blessing.
Eureka Report colleague Alan Kohler has long campaigned against the nonsense that goes on in the name of “share buybacks” and does so again today using the present Westpac rort as his evidence in chief.
very easy to just skim over the link, but if you haven’t perused
Kohler’s column this morning or if you’re less than full bottle on the
gigantic fraud being perpetrated on the rest of us taxpayers, please go
back and click on the link and read the whole thing.
you will be as astounded, just as I was the first time I had to do an
interview about such a scheme. I kept thinking it couldn’t possibly be
legal, that the ATO couldn’t allow such an abuse of accounting fiat.
But of course I was wrong.
A step down from this multi-billion
dollar rorting on the grand scale is the sort of thing that was
highlighted by ex-RBA director Rob Gerard’s little difficulties with
the tax man.
The Gerard case introduced a new level of tax
arrangement to the general public: the tax sham. Previously there had
just been tax evasion and tax avoidance – one is illegal and the other
is not and it’s very important to know the difference when writing
about them if you want to avoid defamation actions.
The tax sham
though seems to fall somewhere between the two. It’s not a crime as
there are no penalties or convictions recorded, but it’s not entirely
kosher either as, at the end of a multi-year legal tussle, money does
get paid to the ATO. The sham is not available to ordinary folk though
as you need large reserves of cash to finance expensive teams of
lawyers and accountants.
Between the buyback and the sham,
business simply lacks credibility when talking about tax reform for the
greater good of the commonwealth. It’s like taking advice on fencing
from a dingo.
CRIKEY: See more on this issue in item 18 today.