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Analysis and Comment (67)

Realistic reforms to federal-state financial relations are possible with the right amount of political will. Realistic reforms to federal-state financial relations are possible with the right amount of political will. AAP/Alan Porritt

Could ‘hard budget constraints’ fix the federation’s fiscal feud?

The federal budget reignited debate over federal-state relations with a decision to cut $80 billion funding for the state responsibilities of schools and hospitals over the coming years. So how can federal-state…
Miners, farmers and trucking companies spoke out over rumoured cuts to fuel tax credits in this year’s budget, and the credits for off-road diesel use are now tipped to be left alone. Miners, farmers and trucking companies spoke out over rumoured cuts to fuel tax credits in this year’s budget, and the credits for off-road diesel use are now tipped to be left alone. Rebecca Le May/AAP

Viewpoints: should fuel tax credits be cut in the budget?

Tony Abbott has warned there will be “tough decisions” in tomorrow’s federal budget – but would his government risk an industry and internal backlash by cutting back on multi-billion-dollar fuel tax credits…
1st class flying: luxury dorm rooms. 1st class flying: luxury dorm rooms. Richard Moross

Take a leaf out of the airlines’ book to sell taxes to the rich

In the big inequality debate, one thing unites those concerned by wealth disparities: they want the rich to pay more in taxes. But how to do this? The “tax efficiency” industry is thriving, money is hidden…
After a promising start to an ambitious economic turn-around program, Prime Minister Shinzo Abe will have more difficulty with tax changes scheduled to come in over the next few years. After a promising start to an ambitious economic turn-around program, Prime Minister Shinzo Abe will have more difficulty with tax changes scheduled to come in over the next few years. EPA/Harish Tyagi

Japanese tax hikes loom large for Abenomics

Another record trade deficit for Japan is raising doubts about Prime Minister Shinzo Abe’s “Abenomics” strategy for economic revival. The new figures follow poor manufacturing sentiment numbers earlier…
Just make sure you get a receipt. Just make sure you get a receipt. Tom Miller/PA

India’s firm stance on tax could actually help investors

India keeps getting into arguments with foreign firms over tax; is it wise to do so? The Financial Times, for one, is in no doubt that India is scaring off foreign investors, and that it is making a mistake…
Sweden shows it’s possible to maintain a welfare state and good public finances Sweden shows it’s possible to maintain a welfare state and good public finances Shutterstock

Swedish lessons for the Commission of Audit

As the Abbott government’s Commission of Audit busily scours the globe for answers to our fiscal woes, where in the world will it look? My tip is that it will dwell with the usual suspects: the UK, the…
You’d need a lot of these to make a dent in our deficit. You’d need a lot of these to make a dent in our deficit. Images_of_Money

Raising top tax rate to 50p won’t raise much revenue

Ed Balls, the shadow chancellor, has announced that if elected a Labour government would return the rate of income tax payable on incomes above £150,000 to 50%. What would the effect of this be? The contention…
Assistant treasurer Arthur Sinodinos is being pushed to consider “patent box” incentives to spur innovation and commercialisation in Australia. Assistant treasurer Arthur Sinodinos is being pushed to consider “patent box” incentives to spur innovation and commercialisation in Australia. AAP/Stefan Postles

Lower tax on profits from patents will spur industry innovation

Australian business’s innovation track record has been patchy, but it’s commercialisation track record has been even worse. Now the Abbott Government is considering another proposal – this time from Ausbiotech…
Finishing touches go on at the World Economic Forum, where Tony Abbott will outline his G20 agenda. Finishing touches go on at the World Economic Forum, where Tony Abbott will outline his G20 agenda. AAP

Davos diplomacy: Abbott sells G20 Summit to world leaders

When prime minister Tony Abbott delivers his speech outlining “Australia’s Vision for the G20” at the World Economic Forum (WEF) in Davos, Switzerland on Thursday, he will have the attention of some of…
No antibiotic resistant bacteria please - in your pork, beef, chicken, or throat. No antibiotic resistant bacteria please - in your pork, beef, chicken, or throat. Dr Graham Beards

Charge fees for farm antibiotics to slow the spread of superbugs

The development of resistant bacteria over the past 50 years stands testament to the power of evolution. While scientists have discovered or created hundreds of antibiotics to kill bacteria, those bacteria…
Got away again. Got away again. MarcProudfoot

Google and ExxonMobil run rings around outdated tax laws

Tax avoidance shows no sign of abating. Google, the company with the slogan “Don’t be evil", is at it again. The company has been named and shamed by the UK House of Commons' Public Accounts Committee…
Next stop: tax break? Next stop: tax break? Phil Hawksworth

There is no evidence the marriage tax break will work

Restoring the tax break for married couples has long been a Conservative Party commitment, and one they now intend to pursue this autumn. The outgoing Chief Rabbi, Lord Sacks, has now – from a non-party…
Serious about capitalising on shale gas. Serious about capitalising on shale gas. HM Treasury

Osborne shoots for energy security, but shale gas is no silver bullet

Last week, Chancellor George Osborne announced a 30% tax rate on shale gas production. Representing a 32% reduction on the standard rate for oil and gas companies, the move is the latest in a series of…
Companies can keep on ducking tax, despite what the OECD says. Companies can keep on ducking tax, despite what the OECD says. Yahoo! Inc

OECD tax avoidance plan is no quick fix for EU

The long awaited report on combating corporate tax avoidance by the OECD sadly has to deal with a corporate tax system which is unfit for purpose. It is a follow-up to the G8 meeting last month in Ireland…
Thumbs up if you want a fair tax system. Thumbs up if you want a fair tax system. Jonathan Porter / Oxfam

Leaders will talk tough on tax, but action may be beyond G8

When the leaders of the world’s most powerful economies gather in Northern Ireland on Monday, one issue will overshadow all others: tax. For years the matter of how global corporations engage with offshore…
This election year, taxation, industrial relations and red tape will feature prominently on the business community’s agenda. This election year, taxation, industrial relations and red tape will feature prominently on the business community’s agenda. AAP

This election year, business will push for a triumph of policy over paralysis

The business community was effectively sidelined at the last federal election, and they felt somewhat miffed about it. Business associations were caught flat-footed at the suddenness of Julia Gillard’s…
Beer taxes played an integral part in establishing Belgian territory. Beer taxes played an integral part in establishing Belgian territory. Flickr\ ee b b

How beer created the state of Belgium

Around the world, Belgium is famous for its beers and its brewing tradition. However, there is another link between beer and Belgium: historically, the country owes its very existence to beer. Surprisingly…
Federal treasurer Wayne Swan welcomed the report. Federal treasurer Wayne Swan welcomed the report. AAP Image/Alan Porritt

Broaden GST and cut industry subsidies: OECD

Australia’s robust economy makes it the “Iron Man” of the developed world but the government should hike the GST rate and apply it more broadly, according to a new OECD report released today. “Tax reforms…
State premiers preparing to gather at COAG on Friday have been disappointed by the GST Review. State premiers preparing to gather at COAG on Friday have been disappointed by the GST Review.

GST review ranges wide, but ultimately delivers little change

As Prime Minister Julia Gillard prepares to meet with state premiers at Friday’s COAG meeting, the elephant in the room will be the Independent GST Review, released by Treasurer Wayne Swan last week. The…
Warnings of a drop in Australia’s real GDP per capita - a measure of living standards - still provide a stark contrast to Greece, where the real GDP per capita is likely to be 25% lower in 2013 than in 2008. Warnings of a drop in Australia’s real GDP per capita - a measure of living standards - still provide a stark contrast to Greece, where the real GDP per capita is likely to be 25% lower in 2013 than in 2008. AAP

Do dire warnings of falling living standards add up to need for tax reform?

Last week, the Organisation for Economic Cooperation and Development (OECD) in a preliminary version of its 2012 Economic Outlook lowered its growth forecasts for Australia from 3.7% to 3.0% in 2013. This…
Chris Jordan will start in his role as Australia’s Federal Tax Commissioner in January 2013. Chris Jordan will start in his role as Australia’s Federal Tax Commissioner in January 2013. AAP

Challenges await Australia’s new Tax Commissioner

In January 2013, Mr Chris Jordan AO starts as Federal Commissioner of Taxation in charge of the Australian Taxation Office (ATO). He follows Mr Michael D’Ascenzo AO, who was not reappointed after his seven-year…
Resolving the US' fiscal cliff through taxation reform will prove challenging for the President. Resolving the US' fiscal cliff through taxation reform will prove challenging for the President. AAP

No clear resolution for the US fiscal cliff

When President Obama took office in 2008, there was little time for rest or reflection. The economy was in freefall and immediate action was required. This time around, the situation is not so dire. But…
Former California governor Arnold Schwarzenegger was reduced to issuing IOUs to pay the state’s bills. Former California governor Arnold Schwarzenegger was reduced to issuing IOUs to pay the state’s bills.

California’s hard lesson Australia could heed: sometimes you gotta increase taxes

Long after President Obama’s re-election was secure, another election day result came in, one that may be of comparable significance in the long run. By a 54-46 margin, Californian voters approved Proposition…
The NSW Auditor-General has revealed discrepancies totalling $1 billion in Barry O'Farrell’s coalition June budget. The NSW Auditor-General has revealed discrepancies totalling $1 billion in Barry O'Farrell’s coalition June budget.

Back in the black but redfaced: NSW Government accounting under scrutiny

New South Wales taxpayers could well be wondering whether the news that the state’s finances are in surplus - rather than deficit - is good news or bad. The state’s Auditor-General Peter Achterstaat has…
Tax reform or trickery? Treasurer Wayne Swan’s plan for businesses to pay a monthly tax bill instead of a quarterly one has been met with acrimony from the business community. Tax reform or trickery? Treasurer Wayne Swan’s plan for businesses to pay a monthly tax bill instead of a quarterly one has been met with acrimony from the business community. AAP

Timing is everything: making sense of Swan’s corporate tax shake-up

One of the more contentious issues in the 2012-13 Mid-Year Economic and Fiscal Outlook (MYEFO) is a tax-timing change. Corporate income tax will be paid monthly instead of quarterly for very large corporations…
Mitt Romney has said that 47% of households pay no federal income tax, but something about the statement doesn’t add up. Mitt Romney has said that 47% of households pay no federal income tax, but something about the statement doesn’t add up. AAP

Doing the math on Mitt Romney and the ‘47%’

Republican presidential nominee Mitt Romney’s comment that 47% of households pay no federal income tax is true. (It’s actually closer to 46%.) But when you dig beneath the bumper-sticker headline, his…
Cuts to the R&D tax incentives for Australian businesses - as proposed by the Business Tax Working Group - have significant implications for our future economic wellbeing. Cuts to the R&D tax incentives for Australian businesses - as proposed by the Business Tax Working Group - have significant implications for our future economic wellbeing. Image from www.shutterstock.com

Scrapping the R&D tax incentive is hardly a smart idea for economic policy

The Business Tax Working Group discussion paper’s suggestion to reduce the R&D tax incentive reveals a clear-cut attitude to policy aimed at Australia’s economic development: “It’s all about the tax…
There are economy-wide gains to be made from lowering the corporate tax rate, but businesses will need to make concessions of their own. There are economy-wide gains to be made from lowering the corporate tax rate, but businesses will need to make concessions of their own. Image from www.shutterstock.com

Subsidies are standing in the way of corporate tax reform

Yesterday, the government’s business tax working group released its discussion paper on possibilities for tax reform. The paper makes a case for a broader base and lower tax rate (the corporate tax is…
Provocative artworks, such as Wim Delvoye’s Cloaca, have drawn a steady stream of tourists to multi-billionaire David Walsh’s Museum of Old and New Art in Hobart. Provocative artworks, such as Wim Delvoye’s Cloaca, have drawn a steady stream of tourists to multi-billionaire David Walsh’s Museum of Old and New Art in Hobart. AAP

Sex, death and taxes: how should the tax system treat MONA founder David Walsh?

It was March last year when I sat down in the chaotic New York office of a leading international tax attorney to conduct an interview for a book I was writing on the campaign against tax havens. But rather…
Former politician and economist John Hewson speaks to ANU’s Crawford School’s Bruce Chapman and Daniel Connell. Former politician and economist John Hewson speaks to ANU’s Crawford School’s Bruce Chapman and Daniel Connell.

John Hewson: tax reform doesn’t just mean lowering taxes

Welcome to the latest in our In Conversation series, between former politician and economist Dr John Hewson, Australian National University (ANU) Crawford School Director of Policy Impact Professor Bruce…
President Obama outlines his tax policy at the White House on Monday. President Obama outlines his tax policy at the White House on Monday. EPA

It’s not the economy, stupid: Obama pivots to tax in attempt to wedge Romney

On Monday afternoon, President Obama delivered what sounded like a speech on tax policy. In reality, though, the speech dispensed more politics than policy - politics carefully crafted to secure Obama…
The Prime Minister is selling the Schoolkids Bonus as extra help for families, but is it good policy? The Prime Minister is selling the Schoolkids Bonus as extra help for families, but is it good policy? AAP Image/Penny Bradfield

Assessing the Schoolkids Bonus: Good policy or just a ‘cash splash’?

The 2012 federal budget has been described as “a big taxing, big spending budget" with a big focus on welfare. The first spending measure to be legislated and to come into effect is the new Schoolkids…
Julia Gillard’s revenue neutral tax reform package will be a tough sell. Julia Gillard’s revenue neutral tax reform package will be a tough sell. AAP

Achieving revenue neutrality in the corporate tax rate will be a tricky business for Gillard

In summing up a business summit in Brisbane on 13 June, the Prime Minister floated her intention to lower the company tax rate - but as part of a business tax revenue neutral package. This intention raises…
The tax transfer system does not treat all families equally. The tax transfer system does not treat all families equally. Sean Dreilinger

Time to start a debate on universal family payments in Australia

Most of the reforms proposed by the Henry Tax Review appear to have died a quiet death. In his recent article on inequality in The Monthly, Treasurer Wayne Swan does not mention the Henry Review at all…
Paul Cleary’s book, Too Much Luck, highlights the many negative consequences of the mining boom. Paul Cleary’s book, Too Much Luck, highlights the many negative consequences of the mining boom. AAP

We are letting our resources luck turn to dust

Paul Cleary’s book Too Much Luck: The Mining Boom and Australia’s Future, is a timely appraisal of the dramatic economic and social impacts, as well as the political ramifications of the current resource…
Changes to the MRRT will leave a gaping hole the revenue the tax originally promised. Changes to the MRRT will leave a gaping hole the revenue the tax originally promised. AAP

We’ve gained a mining tax, but lost a rare opportunity

Federal Labor’s mining profits tax was originally designed to be a redistributive measure from a very profitable section of capital to all of capital through company tax cuts. The mini-me Mineral Resources…
Paul Cleary’s book, Too Much Luck, paints a negative picture of Australia’s mining industry. Paul Cleary’s book, Too Much Luck, paints a negative picture of Australia’s mining industry. AAP

Has the mining boom given us ‘too much luck’? Hardly

If Paul Cleary is to be believed in his recently published book, Too Much Luck: The Mining Boom and Australia’s Future, the resources boom is the worst thing that ever happened to Australia. He maintains…
Scripted beforehand: Tax Forum discussion about a lower corporate tax rate followed predictable lines. Scripted beforehand: Tax Forum discussion about a lower corporate tax rate followed predictable lines. AAP

Reduce the corporate tax rate? Not so fast

As former Treasury Secretary Ken Henry observed, much of the national conversation that took place at the first session on business taxation at the National Tax Forum could have been scripted beforehand…
Ken Henry at the Tax Forum: talkfest or useful? Ken Henry at the Tax Forum: talkfest or useful? AAP

Missed anything from the Tax Forum? Catch up here…

So the Tax Forum is done and dusted. Was it simply a talk-fest? Or a useful exchange of ideas? We’ll have to wait and see. In the meantime, if you missed anything, don’t despair: we’ve collected some of…
Australia needs a tax on unhealthy foods that covers more than just fat content. Australia needs a tax on unhealthy foods that covers more than just fat content. Flickr/ms Tea

Is a ‘fat tax’ the answer to Australia’s obesity crisis?

Australia should follow the lead of Denmark and consider taxing foods high in saturated fats to curb the nation’s growing obesity problem, Greens leader Bob Brown said at yesterday’s tax forum. This week…
The Tax Forum must ensure we have a sure-footed approach to reform. The Tax Forum must ensure we have a sure-footed approach to reform. AAP

Tax Forum: Critical reform is worth the effort – and the wait

Periodic tax reform is necessary as governments respond to new patterns and forms of economic activity and the inevitable political pressures these changes create. Yet the politics of tax reform is politically…
European Commission President Jose Manuel Barroso says the FTT could raise 55 billion euros a year. European Commission President Jose Manuel Barroso says the FTT could raise 55 billion euros a year. AAP

The EU’s adopting a financial transactions tax, so why don’t the rest of us?

Momentum is building behind the global campaign to impose a tax on transactions in financial markets, with European Commission President Jose Manuel Barroso announcing plans to introduce the measure as…
The local government sector could serve as a valuable model for taxation reform. The local government sector could serve as a valuable model for taxation reform. Flickr/David Jackmanson

Tax Forum: the overlooked role of local government in tax reform

There is a contradiction at the heart of tax reform. Timid governments, worried about a voter backlash, do too little, too late. Yet in the medium to long term, major structural changes in the economy…
President Obama has proposed $US1.5 trillion worth of tax increases for the rich. President Obama has proposed $US1.5 trillion worth of tax increases for the rich. AAP

Evoking Keynes and Truman, Obama’s plan is good policy and smart politics

Sometimes good policy and good politics are the same thing. By tying together lessons learned from economist John Maynard Keynes and former president Harry Truman, Barack Obama is taking steps that may…
Record terms of trade have masked dropping productivity growth - until now. Record terms of trade have masked dropping productivity growth - until now. AAP

Australia’s productivity: what can be done?

What is to be done about Australia’s deteriorating productivity performance? It’s by no means inconceivable that the answer to this question could be “nothing”. Historical precedent strongly suggests Australians…
Nicolas Sarkozy and Angela Merkel believe an FTT can help solve Europe’s debt woes. Nicolas Sarkozy and Angela Merkel believe an FTT can help solve Europe’s debt woes. AAP

Let’s all dance to Europe’s tune and impose a financial transactions tax

French President Nicolas Sarkozy and German Chancellor Angela Merkel have announced a plan to impose a financial transactions tax (FTT) for the Eurozone, as part of an effort stem the bloc’s worsening…
High profile Wickenby targets like Glenn Wheatley make good headlines, but conflate avoidance and evasion. High profile Wickenby targets like Glenn Wheatley make good headlines, but conflate avoidance and evasion. AAP

Tax avoidance or tax evasion? A haven for misunderstanding

Distinctions matter. Maybe lawyers devote more effort than the average citizen to making distinctions, and invest the ones they find with improbable significance, but these are occupational hazards. Even…
Commercial activities by charities which don’t directly fund their altruistic activities, are set to incur tax. Commercial activities by charities which don’t directly fund their altruistic activities, are set to incur tax. AAP

Let charities keep their income tax exemption

The not-for-profit sector is facing the loss of a privileged exemption that allows charities to avoid paying tax on profit-making activities. Announced in May’s Budget, the changes will see not-for-profit…
Without the truly important issues on the agenda, October’s tax forum will achieve little. Without the truly important issues on the agenda, October’s tax forum will achieve little. AAP

Swan’s tax forum is a chance for reform – we just need to ask the right questions

Debates around tax are too often seen as marginal to real life and not very interesting. October’s tax forum offers an opportunity to challenge this misconception and do some hard thinking about what society…
Interventionist or free market - just where do our economists sit? Interventionist or free market - just where do our economists sit? Flickr/Daquella Manera

What our economists really think about politics

A funny thing happened on the way to this year’s Australian Conference of Economists. A survey was conducted of the policy opinions of members of the Economic Society of Australia (ESA). Far from conforming…
Price-gouging might occur under the carbon tax regime, but market discipline will keep it in check. Price-gouging might occur under the carbon tax regime, but market discipline will keep it in check. Flickr/dmcneil

Trust the market – why regulation won’t stop carbon tax gouging

Federal Treasurer Wayne Swan has announced that the government will provide the competition watchdog with almost $13 million in extra funding to tackle carbon tax-related price-gouging. In this context…
Funding for agricultural research and development has to come from somewhere. Funding for agricultural research and development has to come from somewhere. AAP

A GST on food could save us from shortages

Food security is on the agenda for Australia. I wrote on this recently, pointing out that while we currently grow enough to feed 60m people, we are not immune to food security pressures. Wealthier nations…
Households will bear more financial burdens as Gillard’s carbon tax regime matures. Households will bear more financial burdens as Gillard’s carbon tax regime matures. AAP

Carbon tax will make working families pay for problems markets created

The carbon tax is short-term carrot and long-term stick. The Coalition’s campaign against “a great big new tax” drove Gillard to introduce a tax for which most people and businesses affected will be compensated…
Many of Ken Henry’s changes have been adopted, but is it reform? Many of Ken Henry’s changes have been adopted, but is it reform? AAP

Carbon tax a step towards reform, but working mothers miss out

At first glance, the Federal Government’s carbon tax plan appears to carry out significant income tax rate reform in the guise of carbon price compensation. Indeed, the proposed tax rate reforms adopt…
Prime Minister Julia Gillard and Climate Change Minister Greg Combet address a press conference on Sunday. A carbon tax package announced today includes compensation measures and a radical overhaul of income tax policy. Prime Minister Julia Gillard and Climate Change Minister Greg Combet address a press conference on Sunday. A carbon tax package announced today includes compensation measures and a radical overhaul of income tax policy. ABC News24

The carbon tax: the experts respond

The Australian government announced on Sunday it would introduce a carbon tax at $23 a tonne next July, rising 2.5% annually plus inflation and moving to a market-based emissions trading scheme in 2015…
Ken Henry’s tax review discusses a ‘bequest’ tax - should it be back on the public agenda? Ken Henry’s tax review discusses a ‘bequest’ tax - should it be back on the public agenda? AAP

Why we should put an inheritance tax back into the spotlight

The concept of death duties reared its controversial head publicly recently, with Greens Senator Lee Rhiannon quizzed on party policy by the ABC’s political editor Chris Uhlmann. Greens leader Bob Brown…
Will Andrew Forrest succeed in his push to change the mining tax? Others have succeeded in the past. Will Andrew Forrest succeed in his push to change the mining tax? Others have succeeded in the past. AAP

Twiggy’s sticking to his MRRT story, so it’s time for a miner history lesson

Andrew “Twiggy” Forrest’s visit to Canberra earlier this week didn’t prove particularly effective in swaying the government on its freshly drafted mineral resources rent tax (MRRT) legislation. But the…
Does the budget lessen or deepen the male-female divide? Does the budget lessen or deepen the male-female divide?

Tax, women and the Henry Review

The Budget: What does it have to do with tax reform? This year’s budget claims to “progress the government’s tax reform agenda, improving fairness and integrity in the tax system”. Does it? The short answer…
Changes to the charity tax rules could impact on Gloria Jean’s among other organisations. Changes to the charity tax rules could impact on Gloria Jean’s among other organisations. Flickr/Edwin Tang ET

Charity tax changes to help lawyers and accountants, but no-one else

Tonight’s budget is expected to tighten a tax loophole for charities which run businesses unrelated to their charitable work. The government thinks it will increase revenue for Australia’s coffers. It…
Significant: Ken Henry’s tax review deserves to be on the national agenda. Significant: Ken Henry’s tax review deserves to be on the national agenda. AAP

Put Henry Review reforms back on political agenda

The Henry Review released in May last year provided the Commonwealth and state governments with a wealth of good ideas for reform, yet so far the political processes have failed to deliver reforms. Why…

Research and News (3)

Research Briefs (5)

Tax sugary drinks to reduce demand

Taxing sugary drinks could reduce the amount consumed by almost a quarter, according to an America study. Yale University…