Monday, May 3, 2010

Unfairness of tax system

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The unfairness of the tax system. What I find particularly annoying with government is its arbitrariness. The tax that it targets certain groups because:
1. They earn more, so are judged to have more capacity to pay
2. They have less capacity to dodge the tax
3. They have less political power to lobby government because they are a minority interest

Case in point. The Australian (Rudd) government is pursuing higher taxing revenues from Australian miners because it expects commodity prices to be higher in the future. At the same time Google pays almost no tax in Australia. I have no problem with Google paying no tax because I dare say that the Australian government offers no benefits to Google that Google doesn't pay for. The problem I have is that miners have no capacity to take their business or expenses offshore like Google.
The problem is this arbitrary tax system is not fair. It is not fair because it is not based on user pays principles. Google earned revenues (estimated) of $600 million plus in the last financial year, and paid $0.7 million in income taxes. Mining companies earned revenues of $60 billion and paid $8 billion in tax.
The Australian government is going after the miners because its easier. Where is the justice in that? Frankly I would simply prefer it if the miners and Google paid for what they used, and we did the same. Those that want library services or to use a community swimming pool paid for them.
If you think principles are 'unrealistic' then I suggest you examine the implications of your arbitrary politics, because they end up in disempowering everyone, everyone jumping through hoops to clear laws, everyone creating all types of loop holes. It results in a great deal of complexity which need not exist, giving a lot of people anxieties they don't need....if not worse. Who does all this affect the most - the poor - who it was supposed to help. Yes, that is right. Income tax was first levied on the rich, and now the poor pay the highest rates, as businesses use all sorts of schemes (i.e. loopholes, legal or otherwise) to evade tax, which they would never openly display their discontent with, in the fear that they might be the subject of an audit.
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Andrew Sheldon www.sheldonthinks.com
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