Predictably, John Howard has caved in to his craven backbenchers pushing for an extension of the rural managed investment scheme tax rort, extending the racket until 1 July 2008.
In the process, he has sold thousands of mug investors down the drain, ensuring they will be tricked into several hundred million dollars worth of mostly substandard financial products. But that’s all right – they won’t know they’ve bought duds until long after the election.
And he’s also robbed taxpayers of several hundred million as well to keep the MIS promoters’ fat commissions and profits rolling in – but we won’t notice that either.
The proof of the poor nature of most of the MIS is their wholesale desertion by the promoters as soon as the tax lure is removed. A genuine business making a reasonable profit should be able to attract investors whether the tax deduction is taken upfront or through the business over the life of the project.
If there was anyone concerned about matters of principle in the government, they should be lobbying to have the tax lurk for forestry MIS dropped as well.
But they won’t.
As Alan Kohler wrote in Eureka Report of MIS companies Timbercorp and Great Southern Plantations:
They sell tax deductions, for which there is a certain demand. If the tax deduction is not disguised as an almond tree/bush and is instead disguised only as a gum tree, it doesn’t matter: the product (the tax deduction) is basically the same, and the demand for it is unchanged.
So the rort goes on.