The regular Essential Research fortnightly average is our only new federal poll for the week, and it finds Labor losing one of the two points it gained last time to record a two-party lead of 53-47. Primary votes are 40% for Labor (down one), 40% for the Coalition (steady), 10% for the Greens (steady) and 1% for what’s left of Palmer United (steady). The poll finds only 26% deeming it likely Tony Abbott will make it to the next election with 57% opting for unlikely, with wide partisan differences along the expected lines. With respect to tax reform, strong majorities are recorded in favour of measures hitting multinational corporations and high-income earners, while fierce hostility remains to expanding or increasing the GST. However, it’s lineball on removing negative gearing, which 33% support and 30% oppose. Questions on economic and financial issues get the usual set of grumpy responses, with a balance of belief in favour of company profits having improved, but every personal and national indicator deemed to have gotten worse.
Interesting that the vast majority of respondents think Tony Abbott is a goner.
I hope they are right. He was never fit, morally or temperamentally, to be PM and this country will be better off without him there.
From last thread:
Lefty
Yeah, I saw Vicki Thomson, CEO of the Uni Gang of 8 on ABC 24 this morning.
She was pretty verbose and obtuse about it and went round in circles for 5 minutes, reluctant to say explicitly in direct terms just what she meant, but eventually it all came out.
Pyne has fixed it so well that as far as the Gang is concerned, it’s now a bucket of shite having been compromised to death as a result of Pyne courting the cross bench.
She / they now want a full review of the matter without a political partisan component ie no more amended bills, no more putting any bill before parliament until wide societal agreement is reached about the need for and nature of reform.
My summary of her input ……. Pyne has totally watered it down and farked it to the point of it being now not recognisable as the original….. it’ll have to be reworked by all.stakeholders before any future attempt to legislate it.
Just as 2014 was a great year for the government, according to Abbott a couple of weeks back, no doubt he’ll laud this as good work by Pyne …… truly fixed up!
Another from last thread:
I also saw Sloppy on ABC 24 (replay of a videoed radio I/V I think, on about tax reform.
At one point he was asked about how most very wealthy people use various (legal) tricks and perks to drastically reduce their tax. Huffing and puffing he argued about the use of “most” …. a small few might do this.
When asked about family trusts he argued that trusts and beneficiaries of distributions from trusts pay tax. He was silent about the fact that the trusts are a perk to pay less tax, and about how distributions can be managed across time and family members in a scheming manner.
On the issue of people paying their due tax, small businesses should be in the spotlight too.
Neighbourhood small business people (tradies) and some small business rels brag about how much of their living expenses can be paid by the business, and of course how the family tax bill is reduced by having their wives / partners on the payroll despite the fact that they do no actual work.
psyclaw @ 3
I wonder how much tax Mr and Mrs sloppy don’t pay because they use these perfectly legitimate opportunities afforded by the Tax laws to organise their income to the most tax-effective advantage.
[Interesting that the vast majority of respondents think Tony Abbott is a goner.]
As Abbott said (incorrectly) it’s the voters who hire or fire the PM. On these numbers Abbott has received notice.
TPOF
The bare minimum would be my guess.
Not to mention the reduced costs of living as a result of the perks of their high level roles in politics and banking.
From previous, slightly edited
[Diogenes
Posted Tuesday, March 31, 2015 at 3:02 pm | Permalink
What a farce. Three years of headlines, getting kicked out of the finals, suspensions and court cases and it’s not guilty.
Essendon should take the AFL to the cleaners in compensation or ASADA should appeal. Absolute joke. ]
Dio,
you’re confusing the situation.
Essendon and its officials were penalised for bringing the game into disrepute.
The club had no mechanism to control and record what players were being given.
This is separate to whether what was given was legal or illegal.
Todays decision was about the players and whether they had received performance enhancing drugs.
The tribunal found,
[In a statement, the Tribunal said it was “not comfortably satisfied” that the players had been administered Thymosin Beta-4 or that they had violated the AFL’s anti-doping code.]
So the tribunal is not saying that the players didn’t use Thymosin Beta-4, they are saying on the evidence presented, without the cooperation of Dank and other key witnesses, they were unable to determine if it was used and if so, who it was used on.
Essendon have no call to complain as it was their negligence and actions that caused the situation.
Fair chance ASADA will appeal the decision so more to come.
Every MP I’ve ever known has had a family trust set up.
I’m told it is to protect the MP’s assets in the event of everything going legally pear-shaped (for whatever reason).
But I’m also sure there is a taxation component to it as well.
Barney
My view is that if Essendon haven’t done anything breaching ASADAs rules that they haven’t brought the game into disrepute. Their supplement program might have needed some more controls but that doesn’t justify getting booted from the finals, suspensions and all this shit for three years.
How unsurprising that the internet infrastructure is not up to speed
[So the tribunal is not saying that the players didn’t use Thymosin Beta-4, they are saying on the evidence presented, without the cooperation of Dank and other key witnesses, they were unable to determine if it was used and if so, who it was used on.]
Yes esspecially if they can compel the witnesses to give testimony an appeal would be a no brainer.
Essendon has clearly got off ridiculously lightly. The AFL and ASADA both look like dopes.
Oops
http://www.theage.com.au/business/media-and-marketing/iinet-blames-telstra-for-slow-netflix-connection-speeds-20150331-1mblrj.html
Diogenes
2 years
I should add I think Essendon have been total farkwits but this finding justifies their actions to a large extent.
Remember all that “darkest day in Australian sport” crap.
[3
psyclaw
When asked about family trusts he argued that trusts and beneficiaries of distributions from trusts pay tax. He was silent about the fact that the trusts are a perk to pay less tax, and about how distributions can be managed across time and family members in a scheming manner.]
Income that accrues in a “trust” does not belong to the trust. By definition, it is held in trust for the benefit of others. The income cannot just “sit” in the trust. It has to be allocated to the beneficiaries of the trust. Those beneficiaries will pay tax on the income because it’s their income.
The days when income could be routed through a trust to, say, young family members and be taxed at the lowest marginal rates are very long gone. Income allocated in this way will be taxed at the top marginal rate regardless of the other income of the beneficiary.
Trusts are a complete pain in the backside from a tax management, capital structure and administrative standpoint. It makes far more sense to run a business through a company than a trust these days.
Vic
Perhaps it’s dragged on so long it seems like three years.
[My view is that if Essendon haven’t done anything breaching ASADAs rules that they haven’t brought the game into disrepute. Their supplement program might have needed some more controls but that doesn’t justify getting booted from the finals, suspensions and all this shit for three years.]
The players didn’t get off because they proved the drug injection programme only used dodgy experimental stuff that hadn’t been banned yet, they got off because ASADA couldn’t prove to a sufficient standard (with key witnesses missing) that there definitely was banned substances in the injections.
You’d have to be pretty trusting to accept that Essendon definitely didn’t provide their players with performance enhancing drugs.
Never say never: the ER question on “remove negative gearing” – which got a favourable response – is interesting enough to encourage me to make one last post. Sorry about the length of these: taxation is a complex issue.
The ER question appears to have been “do you support the removal of negative gearing?” A simple question covering a multitude of possibilities. Did these mean removal of negative gearing for businesses: an idea unheard of in any capitalist society not to mention quite a few notionally communist ones?
I don’t quite see how a system in which businesses were only allowed to operate with equity funding would work: it would appeal to Muslim fundamentalists who oppose usury in any form, but probably nobody else. It would be the end of commercial banking as we know it, and might well lead to the collapse of the entire economy.
So ER probably didn’t mean that. They probably meant individual taxpayers being able to deduct losses from negatively-geared investments against their earned income. Again, it isn’t clear if we are talking only about direct investments in residential property, or negatively-geared investments in anything at all: eg, commercial property, shares, etc.?
If we mean negatively-geared investments in anything at all, then what is the Government going to do if I shift my property from being owned by me to being owned by a private company that I establish, and which – by dint of its being highly-geared, loses money hand over fist?
There are a lot of other issues that need to be thought about as well. If getting rid of negative gearing on residential property did what it is meant to do, lots of investors would get out of the rental market and house prices and land values would consequently fall in many areas. This would lead to reduced tax revenues for State and local government. At the moment, States charge pretty high levels of land tax in the knowledge that, for most payers, these are indirectly subsidised by the Federal Government through negative gearing. If negative gearing goes, these tax rates would probably have to fall, or else they would drive even more investors out of the market, pushing land values down further in a bit of a vicious circle.
And it goes without saying that there would have to be some sort of an impact on the rental market: particularly in those parts of Australia where capital gains are low and slow (eg, Hobart, where I live). This impact could be offset by a substantial increase in investment in affordable public housing: but that expenditure burden would greatly reduce the net fiscal benefit from removing negative gearing.
I’m certainly not saying that the idea isn’t worth looking at. As I have said before, I would greatly favour a system in which there was a greater incentive for mum and dad investors to put money into equity investments like superannuation rather than geared investments. A major problem I have with what a lot of the lefty commentators are saying at the moment is that the seem to want simultaneously to get rid of negative gearing and tax the bejeesus out of superannuation. As far as I can see, this strategy will drive the middle to upper income earners into the hands of shyster financial advisors touting various sorts of schemes involving shelf companies, offshore havens, etc, etc.
Wouldn’t it be better to encourage mum and dad investors to put their money into safe, socially-beneficial superannuation by giving them a small concession to do so? As I have said, I reckon 10 cents off the top marginal tax rate would be enough. Just put an upper limit on the size of the total holding one person can have and still make concessional payments into it. Then you can clamp down on everything else.
What you can’t have is a system in which the middle to upper income PAYE taxpayers who already pay almost all of the tax collected are made to pay even more. If you want a communist society, I think North Korea is open to anyone who’d like to migrate there.
[Remember all that “darkest day in Australian sport” crap]
Yeah I think today is darker. Not only was there almost certainly (IMHO)systematic drug cheating across two codes (making them the two dirtiest sporting codes in the world) ASADA couldn’t prove it to the required legal standard.
Schools always talk about student centered learning, but it’s usually just a line in their vision statement, not a reality.
This is what a student centered school actually looks like —
[‘I’m yet to come across a kid who doesn’t love the school. That’s a pretty rare thing in this day and age,’ says Principal Peter Hutton.
‘If you ask them why, basically they are in control. They can do what they want to do, provided there is a positive learning outcome.’]
[Aside from being able to choose from one of three start times—7:15 am, 8:50 am and 10:30 am—students are able to structure their subjects to fit their strengths and interests.
Does that mean students can leave behind otherwise mandatory core subjects like English, for instance?
‘Six hundred and eighteen of 620 students have chosen to do English,’ says Hutton. ‘The other two have chosen philosophy and literature instead.
‘They feel that it is their choice. That is why they feel empowered.’]
http://www.abc.net.au/radionational/programs/rnafternoons/victorian-high-school-teaching-a-new-way/6353574
Interesting Essential.
Seems that if you want to be populist on Tax “Reform”..Be seen to hit Google and their Ilk, Reduce Tax concessions for the wealthy on Super, modify Negative Gearing (there are a lot “dont know” on this one), and whatever you do, DONT mention raising the GST.
None of the above a problem with would I. And, they may well be the most “do-able” politically which is important. The GST thing is significant, since, for all the reasoned argument in favour of raising it, there are a LOT of things that can be done to improve revenue BEFORE you need to try and do that.
Its actually strange to see the emphasis that the Libs are putting on business tax cuts at the moment. Bracket creep is an argument that may get some currency, but FFS, the Tax Free Thresholds have gone up substantially recently so which is a pretty good bonus for taxpayers i reckon.
[Diogenes
Posted Tuesday, March 31, 2015 at 3:55 pm | Permalink
Barney
My view is that if Essendon haven’t done anything breaching ASADAs rules that they haven’t brought the game into disrepute. Their supplement program might have needed some more controls but that doesn’t justify getting booted from the finals, suspensions and all this shit for three years.
]
Essendon are not subject to ASADA’s rules but their players are.
But as part of being part of the AFL, they have a duty of care to their players that they do not endanger their careers.
By not being able to say that their players had not received banned drugs as part of a club sanctioned programme they breeched their duty of care, breaking AFL rules and hence were punished by the AFL.
[The ER question appears to have been “do you support the removal of negative gearing?” A simple question covering a multitude of possibilities. Did these mean removal of negative gearing for businesses: an idea unheard of in any capitalist society not to mention quite a few notionally communist ones?]
I don’t think anyone is suggesting you shouldn’t claim an interest expense deduction in a business using the borrowed capital. The question is how far should taxpayers (or consolidated groups of tax payers) be able to transfer and use an interest deduction from a loss making business in a profit making business.
From the text at the start of this thread:
[” With respect to tax reform, strong majorities are recorded in favour of measures hitting multinational corporations and high-income earners”]
That might be until the multi-tens of million dollar disinformation campaigns that would be launched against any Government that actually tried this.
I did toy with throwing in an aside to that effect, Steve, albeit one worded more neutrally than your own.
@Victoria/12
Interesting considering that Telstra is launching new Broadband plans, it’s already rolled out to existing customers.
two options for negative gearing firstly the easy regressive one and that is to simply deny interest deductions against PAYG income.
The second is to quarantine interest deductions to the business or enterprise that earned them. So effectively if you were a payg taxpayer with a geared share portfolio and a geared rental property the interest deductions for the rental property could only be carried forward and used when the property became revenue positive and same for the portfolio.
Might upset some if they realize that individuals have a much more restrictive loss regime than companies.
Steve777@24: “the multi-tens of million dollar disinformation campaigns that would be launched against any Government that actually tried this” They wouldn’t necessarily be “disinformation” campaigns until we know for sure what was proposed.
As my long post above indicated, this is an area full of potential traps.
Psyclaw I am surprised you have time to blog with your in depth knowledge of the tax system you must be in great demand and making a fortune,in fact you know diddly sqat about the tax system especially in relation to trusts, I suggest you look up who actually pays the tax in Australia, it is predominatly the people you hate.
Zoomster@20
For mine student centred learning is one of many fads which come and go in the education game.
Nothing wrong with fads other than they become a new orthodoxy.
Along with a whole of language approach to English and Venn diagrams, they all have their day.
In WA my kids brought home Portfolios in lieu of a more formal report. A total waste of effort on behalf of teachers and kids and totally bemusing to parents.
Another fad which I think has bitten the dust. Fun while it lasted however.
http://www.crackpotmanor.blogspot.com.au/2015/03/its-not-about-tax-payers-its-about.html?m=1
This was written and sent to me by one of my followers. Has had a good run on Twitter. The Lady has a profoundly disabled son and is really hard up financially.
[That might be until the multi-tens of million dollar disinformation campaigns that would be launched against any Government that actually tried this.]
I dont know a government of courage and principal might actually gain popularity standing up to big business. I thought that was what rudd was doing when he seemed to delibetately poke the mining industry in the eye. History seems to suggest that rudd wasn’t up to something so courageous (it would have been substantially out of character) and labor as a collective is too cowardly to do this.
Hockey is clearly on big business’ side and openly telling big business this is the case (but that he might have to say a few hollow bad things until he can turn the debate around).
Helping hockey and big business is labor and the greens who are about to find themselves smashed to pieces during the senate enquiry. It will be a blood bath for the left.
Steve777@24
Except there are noises coming from the likes of Peter Martin (this mornings article) and Treasury that much of the current noise on tax reviews/ increasing the GST to as much as 20% plus broadening it etc are about lowering company tax rates – to as much as Nil ie over a period etc – something hockey has floated himself.
Looks a hell of a hard sell to me – to double the GST and lower company taxes.
I wonder if this would have been trotted out this week if the tories had lost in NSW on the weekend ?
MB…
[Wouldn’t it be better to encourage mum and dad investors to put their money into safe, socially-beneficial superannuation by giving them a small concession to do so?
As I have said, I reckon 10 cents off the top marginal tax rate would be enough. Just put an upper limit on the size of the total holding one person can have and still make concessional payments into it.]
A 10% concession on the taxpayer’s marginal rate…whether they are paying the highest rate or a not…is a good idea.
btw…I’m not completely opposed to negative gearing concessions for purchases of new housing. This adds to supply and is a good thing from the viewpoint of rental supply. However, it should not be possible to negatively gear the purchase of existing housing. This does nothing for supply and just provides a subsidy to speculative buying.
[a hell of a hard sell to me – to double the GST and lower company taxes.]
That is the project – it has been going well since the 1980’s – big business to use the imminent BEPS senate enquiry to show the Australian tax system is one of the toughest in the world and that the company tax rate needs to come down (treasury already believe this I think). A woefully underprepared and ignorant ALP and greens to help.
Meher baba @2458 (prev. thread):
A sensible suggestion, although I think you’re being even more cynical than I am about what’s likely to get fronted as “reform”. And that’s saying something!
I must admit, I hadn’t considered the “rushing to save money before retiring” angle – which was pretty silly of me, since that’s precisely what my grandfather did before company politics forced him to retire three years earlier (and much poorer) than he had planned.
By all means, moving to an absolute cap on assets in the fund if you want tax deductibility (as opposed to annual limits on tax deductibility) makes sense.
zoomster @2460 (prev. thread):
The whole bloody Government is an insult, both to hard-working Australians and to those who want to be hard-working Australians!
It never ceases to amaze me that Joe “lifters and leaners” Hockey could go into court and say, with a straight face, that his feelings were hurt by Fairfax’s words.
[“But I’m also sure there is a taxation component to it as well.”]
Family Trusts work this:
Family Member A makes $300,000 a year paid to the Family Trust
Family Member B makes $30,000 a year paid to the Family Trust
Family Member C is your 18yo teenage son who is unemployed so $0 a year
The Family Trust then pay Members A, B, C equal amounts in income.
Family Member A now makes $110K a year
Family Member B now makes $110K a year
Family Member C now makes $110K a year
Net effect is that Family Member A is no longer paying tax on $300K a year, they are paying tax as if they are 3 different people paying $100K a year.
Yes it is a bit of a rort, but it’s not entirely tax evasion as legally person A, B and C are now being paid a wage and are legally entitled to the money.
Meher baba:
[What you can’t have is a system in which the middle to upper income PAYE taxpayers who already pay almost all of the tax collected are made to pay even more. If you want a communist society, I think North Korea is open to anyone who’d like to migrate there.]
It’s amazing, how any suggestion of increasing the taxes paid by the wealthiest – who have gotten even wealthier in recent decades both absolutely and relative to the general population, thanks in large part to government policies designed to encourage upward redistribution of wealth – provokes screams of “COMMUNISM!!one!!” and comparisons to North Korea.
In case you don’t get it, meher (and I don’t think you do on this issue) there’s a middle ground between the Gilded Age and North Korea. Or was Australia another North Korea during Menzies’ time, when the top marginal rate was 67 cents in the dollar?
Right now, we’re closer – significantly so – to the Gilded Age.
[Yes it is a bit of a rort, but it’s not entirely tax evasion as legally person A, B and C are now being paid a wage and are legally entitled to the money.]
Your post i almost agree with I would just point out the income needs to be the income of the trust, they way you wrote it looks like you can just misdirect payg wages through a trust. This is easy so long as you have some kind of business the trust can run and own.
You could also negate much of this with my addendum yesterday to allow life partners to make a once off nonrevokae election to be taxed and save super as one economic entity.
WWP@27: your second option is more or less what Hawke-Keating introduced in 1985. It’s ok in principle, and might have succeeded if it had been introduced in a slightly less hardline way: I remember thinking at the time that one more palatable option would have been to put a limit on the losses that people could deduct against other income: either an absolute cash limit or, perhaps more simply, a 25% or 50% limit. Instead, Hawke-Keating went for gold, and came up with nothing but merde.
The best way to achieve lasting reform is on the “softly, softly catchee monkey” principle.
The introduction of the CGT was not on a winner-take-all basis, and we still have a CGT: all Howard could do was muck around with it a bit (improving it in terms of simplifying it, but probably distorting the incentives in the wrong direction). But Labor couldn’t hold the line on negative gearing reform for more than two years: and this was at a time when the numbers of people adversely affected by the reform would have been vastly lower than would be the case now.
Would any government really want to go through all this again? That’s why I’m worried that they will take the easy option of beating up on superannuation contributions, thereby further entrenching the bias in the system away from savings through equity and towards savings through gearing. Throw in Peter Martin’s suggestion this morning of abolishing dividend imputation and we’ll see the start of a debt-fuelled spree.
I hope we get some advance inkling that such a reform package is in the offing, because I for one will be buying as many shares in the major banks as I possibly can: even without imputation, they will represent terrific value for money.
TBA @37:
[Yes it is a bit of a rort, but it’s not entirely tax evasion as legally person A, B and C are now being paid a wage and are legally entitled to the money.]
If even you are prepared to acknowledge that it’s a rort, then the law needs to be changed.
Also, what idiot of a politician gives their unemployed 18 y.o. kid $110k/year?
Matt@38: “Or was Australia another North Korea during Menzies’ time, when the top marginal rate was 67 cents in the dollar?”
No, it was a country with a stagnant and far more inequitable economy than we have today.
[Also, what idiot of a politician gives their unemployed 18 y.o. kid $110k/year?]
You probably would have the 18 year old loan it back to the trust.
Steve777
[That might be until the multi-tens of million dollar disinformation campaigns that would be launched against any Government that actually tried this.]
As we saw, when Labor tried to tighten up the FBT on novated leases. This policy would lead to The End Of The World As We Know It. Thanks to Hockey, that rort still goes on.
Briefly@34: “A 10% concession on the taxpayer’s marginal rate…whether they are paying the highest rate or a not…is a good idea.”
Oops! Sorry, this is exactly what I meant. It should certainly apply to the lowest income earners, who currently pay 15 cents on their superannuation contributions even though their average tax per dollar earned is less than this up to something over $50,000 per annum.
Re: myself @38 –
[Or was Australia another North Korea during Menzies’ time, when the top marginal rate was 67 cents in the dollar?]
Incidentally, one of the things funded by that 67% top marginal rate was a massively more generous unemployment benefits scheme – the unemployment benefits in 1961 were over half of a full-time minimum wage job in industry (Per Menzies’ election speech in 1961).
For those not “in the know” about unemployment benefits, you’d have to increase Newstart by about 25% to get to half the minimum wage for a full-time job today.
So not only was the Menzies Government – the first, prototypical Liberal Government – quite prepared to tax the wealthy at rates that people like meher baba consider tantamount to communism, the money went to significantly more generous income support programs than today!
Truly, Sir Robert would be rolling in his grave to see what today’s Liberal Party has become.
kakuru: “As we saw, when Labor tried to tighten up the FBT on novated leases. This policy would lead to The End Of The World As We Know It. Thanks to Hockey, that rort still goes on.”
In my ideal universe, this would be the #1 change in any tax reform package. Now that Australia is getting out of the car-building industry, I am at a loss to conceive of any policy justification for it.
WeWantPaul@35
Just put it to voters and see what reply they get then.
TBA:
“We can learn a lot from our brothers across the ditch”
Manners in sport for a start.
MAtt@46: “So not only was the Menzies Government – the first, prototypical Liberal Government – quite prepared to tax the wealthy at rates that people like meher baba consider tantamount to communism, the money went to significantly more generous income support programs than today!”
The income support programs of the Menzies era were not at all generous to sole parents who weren’t widows, or people with disabilities or serious illnesses. In those days, it was much harder for women living in abusive relationships to get divorce or any sort of income support. Abortions and homosexuality were totally illegal, and we didn’t allow non-white people into the country. We had ludicrously high levels of tariffs industry protection and we were wasting money hand over fist on building useless dams all over the country and subsidising farmers to within an inch of their lives. Lots of major works of world literature – Joyce’s Ulysses being a prime example – were banned.
I prefer 2015, thank you very much.