Australia govt set to impose a tax on online commerce

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More steps are afoot to tax the Australian public. This time it is a corporate business owner who is looking for government favours. The government is taking steps to tax online commerce. Why? Because Gerry Harvey, owner of the retail chain Harvey Norman is not seeing the sales growth that he would like to see. The reason why his sales are flagging is of course because his prices are too expensive. For example, the USB memory sticks which he can buy in China for $4-5, he sells for $40-50. Why wouldn't people look online. If he is worried about the shift in business online, then let him improve his online presence.

In fact I know that he is doing that...but that is not sufficient. He wants to help the government legitimatise the adopting of a new tax, which gives him some market favour. One has to recognise at this point the difference between business people who have integrity and those who don't. It takes more than participation in a market to be a capitalist; there is a philosophy or theory of values underpinning it. Consider that free trade is based upon the 'voluntary' and mutual exchange of goods and services. It is a conditional arrangement. No goods or services, no payment. Compare that with government-sponsored extortion, or those efforts by govt to extort some market advantage through government regulation.

Harvey would have you believe that he is protecting Australian jobs. Nonsense, he is protecting the value of his retail store investments. People don't need to go into his store to find the value of his products, they need only see an online product review, or search for other online sources of information. They are more trustworthy than anything his uneducated sales people might convey because the customer has nothing in writing. They are not accountable, and most do not know what they are talking about.

The reality is that Australians or Kiwis should not be working in retail stores. It is low-value employment; particularly given the trend towards online shopping. The implication is that Harvey is looking at a form of protectionism. These people ought to be studying software, business services, etc. Not wasting time in retail stores.

From the perspective of the government, this is the type of complaint governments love, because it is an excuse to adopt a new tax or extend its taxing powers to another sector. How can people plan their lives if there is a government who is ready to stamp out any commercial opportunity. We recently saw the government jump on the resources industry, wanting to adopt a new resource rent tax. It saw that the resources sector was going to take off...its taken them 20 years to finally realise..and they want a 'piece of the action'. They earned nothing, they take what they live....seemingly under the pretense that they are serving the public interest. All extortionists labour that argument. Altruism is just one excuse to steal from others. Its not a virtue. Its a dirty justification for favouring the weak, who do not know or what to know how to live, at the expense of the virtuous, who know how to live, whose lives the parasites depend upon. If these 'parasites' like Harvey (yes, business is often worse that the humble beggar) are doing nothing but reclaiming some loss because of some grave injustice...then let them recoup it through the court system. It will make a great class action. I would even favour overhauling our court system. Surely with all these taxes we might expect a decent justice system. You might ask...where does all the money go! We don't need any arbitrary law which incorporates a lot of exceptions, creates loopholes, and a resulting litany of failures in execution. We simply need a privately-run court system and common law. Anything else simply exists for the government to justify its role as a middleman.

Harvey acknowledges that online commerce accounts for just 4% of retail sales, but argues that his lost sales growth could become a reality if 'online commerce' doubles. The reality is that he does have advantages in certain areas. He has an advantage in several areas:

1. Old people are less inclined to shop online

2. Certain products are not easily bought online, e.g. bulky or technical

He also has some disadvantages. People can come into his store, ask for advice, examine a product, and then buy online. He has the opportunity to offer products online too. Maybe he could package warranty with store-bought product only. That is after all part of his value-add.

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Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Labor making policy on the road

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What can you expect from trailer trash. The Gillard government has been caught out making policy on the 'campaign road'. According to the latest news from SMH, Gillard's people did not adequately understand the policy which they had committed themselves to in the wake of the election. This has culminated in another huge glitch by this government. Might we see the Independents abondon these sorry group of MPs? Full story here. The result is a conflict between the state and federal government over the sharing of mineral royalties. There will now be a competition to find out who can extort more. Back in the old days, competition was synonymous with freedom. i.e. Choice. But in this case, miners don't even get to choose the government who will lynch them...nor shareholders for that matter.

Japan Foreclosed Guide Mining Fundamentals eBook Resource Rent Tax Australia

Author Andrew Sheldon| Applied Critical Thinking | www.SheldonThinks.com

Gillard driving Australia to economic distortion

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Australia’s PM says ‘Australia won't be able to meet its targets for reducing carbon gas emissions without charging polluters’. Actually that is not true. She could if she wanted to simply legislate to prohibit or phase out those technologies and industries which cause pollution. After all, if the government really believes there is a dire catastrophe around the corner from climate change, it ought to take that action. The reality is that the government is using ‘fake science’ to lobby for more tax, knowing full well it will not reduce carbon emissions. In fact it will have the opposite effect; as all government ‘ideas’ tend to have. Let me give you some examples:

1. Governments in Australia, NZ, Germany, Denmark, etc had the great idea of offering free insulation to the poor, and to those homes which are reluctant to invest in such schemes. Far from resulting in subsidies, it saw installers mark up their prices, so there was in fact no benefit for home owners. It gets worse. All those installers took on more staff who incorrectly installed the product resulting in legal action, and in some cases the product integrity (i.e. the water-repellant character of the product) has been questioned, i.e. AirFoam in NZ. It gets worse. Far from helping people to save energy, it actually gave homeowners an incentives to shift from insulating their bodies with clothes to using 'inefficiently' heating their entire homes with wood fires. So some 800,000 homes in NZ alone could end up consuming more energy than they would otherwise have used...because consuming it before would have been a waste of money.

2. Governments argue too that penalizing polluters will cut pollution; but in fact it will push industry offshore to China, or other third world countries where standards are more lax, and these companies will have to ship products around, so transport costs will be higher. It can only result in a sub-optimal response. Of course business wants a carbon trading scheme so it can simply pass on the cost to customers. Of course it does not care as long as the world follows the same stupidity. This is the stupid pragmatic or relativist philosophy which will drive the world towards fascism. It gets worse.

3. Governments will be far less efficient with the tax dollars collected than business, because governments don’t actually create wealth. You say governments are not supposed to create wealth..true, but they ought to facilitate wealth creation, not sabotage the process. We must remember we really can’t afford to obstruct wealth creation, lest we be underfunded or too poor when a real catastrophe arises. Its not just about the money either; its the technology that money allows us to fund. Technology which allows us to overcome such challenges. You will not hear about those products from government. Why? Because it is not responsible for them. They are only responsible for the real crises, like financial meltdown, caused by government intervention in financial markets.

For those who still believe there is a primarily human cause to climate change, let me raise the specter of solar flares and sun spots. Research since 2005 is showing that this is a far more plausible cause of recent climate fluctuations. The correlation is unmistakably good for the last few years of day. Al Gore swooned people with his ‘hockey stick’. It was a fabrication based on dubious extrapolation of data.

If there is an end for the world in sight, it is going to be precipitated by government, and its unthinking leaders like Julia Gillard. Taxing pollution will not cut pollution it will merely impose a cost on existing plants. It will speed up the replacement of old plants. The reality is that the government does not believe the science either. It just feels compelled to appease its unthinking electoral support base. Really Labor cannot think beyond that. It will do a fabulous backdown after the election. Should we be worried then? Well yes, because we will awaken the next day as a fascist regime where facts have been displaced by the arbitrary assertions of politicians. Liberals in the media will help us get there.

Want to know more about climate change - then listen to critical thinking scientists, not the academics detached from reality with a liberal agenda. You never here about them in the media.

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Author

Andrew Sheldon

Resource Rent Tax Australia

Applied Critical Thinking | www.SheldonThinks.com

Andrew Forrest rejoins Resource Rent tax opposition

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I am pleased to see that Andrew Forrest has either rejoined or clarified his position with respect to the Resource Rent Tax, however I am suspicious of his support because he has sought arbitrary clarification of his position at the expense of principles. On the one side I understand that he is trying to advance his shareholders interests (i.e. shareholders in Fortescue Metals), but on the other hand, his shareholders are likely to have broader interests. His customers for iron ore also have broader interests. They also want to see all these smaller, less advanced iron ore projects developed, as well as coal projects, since iron ore customers also buy coal.

So herein lies my problem with Andrew Forrest's real position. He and the government are really the ones who solely benefit from his little backyard deal. He has given the government a 'card' to sell in this election, that they were able to reach a deal with the 3 largest miners. My problem with this is that Forrest has court and received favour from the government, and as a result of those actions, some iron ore projects in Australia could face excessively high taxes, whilst he is quarantined from them. This is therefore a form of protectionism. It has established a 'tax barrier to entry' in the market, and it will result in him having the favoured position of rolling out further iron ore production capacity at the expense of others.

Really I would like to see Andrew Forrest repudiate his agreement with the government prior to this election, as well as support the efforts of the Association of Mining and Exploration Companies (AMEC) to disparage the unfairness of this tax. The issues which should be raised in this media campaign are:

1. The desirability of government vs private spending

2. The arbitrary expansion of govt power

3. The arbitrary expropriation of wealth from 'select' shareholders, who need not be even wealthy ones. The smart money might already have left iron ore.

4. The unfairness of the tax - the govt picking winners, Google paying 0.5% tax compared to the mining industry, over 44%.

5. The impact on our credit rating, which will raise interest rates

6. The impact on the economy and jobs

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Author

Andrew Sheldon

Resource Rent Tax Australia

Applied Critical Thinking | www.SheldonThinks.com

Resource Rent Tax to slow growth

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Investment bankers are starting to come out with preliminary statements about the Resource Rent Tax slowing Australia's economic growth. The SMH media article cites a 0.5% reduction in growth by UBS, but this ignores the other impacts which we cited in our article, i.e. Sovereign risk deterioration and cost of capital increase, in addition to the reduced investment. They also ignore the lost capital gains from subdued interest in capital acquisitions. Their estimates were preliminary.

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Author
Andrew Sheldon
Resource Rent Tax
Applied Critical Thinking | www.SheldonThinks.com

The ethics of a Resource Rent Tax

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The Resource Rent Tax (RRT) is not a new tax - it is already applied to the oil industry all around the world. The justification of course is that oil is used by everyone so its a great resource to tax at every stage of the production process. The utility of oil ensures that it is a relatively price inelastic good.

Probably the biggest beneficiary of the resource rent tax will be NZ, Indonesia and PNG. Why? Because:

1. NZ has huge resources of iron sands off its coast. Those resources are remote from Asia, however if they are developed, they will justify a large capacity port able to handle 180,000 dwt vessels. Higher iron ore prices will result in more expensive steel, so NZ & PNG timber resources will also benefit as more houses will be built with wood. Rio Tinto controls those resources in NZ. Of course they will need to duplicate infrastructure, and ships will have to travel further...so much for Rudd's green(house) credentials. Well I guess we all going to end up paying more tax, so that's pretty green, not having anything to spend....or is that red. Not sure what colour communism uses these days. I think green.
2. Same problem for other minerals. Of course when the Resource Rent Tax was applied to oil, people probably did not expect that it would be applied to other minerals. The point is that if you get on this slippery slope of conceding a moral principle (i.e. that its ok to tax oil because you are a beneficiary), eventually the predators go after you. It was the same back in the 1800s when they introduced the first income taxes. They were introduced on the 'rich'. The "majority" (i.e. poor) thought this was a great system. Today the poor pay as much, if not more, tax than the rich. So you think that is justification for more taxes on the rich? Crazy, that is the thinking that got you where you are today. The answer is principles people! Not more arbitrary powers to government.
3. PNG as well as Indonesia have iron sands along their coast, which are likely to benefit as a result of the Australian government's policy. i.e. Indo Mines and MIL Resources. These resources are on the coast - not 300km inland, and they are closer to Asia.

Pity us that the mining industry are such poor victims. They could never identify the underlying principles. Like you, decades they abandoned ideology, and they dare not alienate themselves by justifying a label by government that they are 'ideologues'. Ouch! That hurt.

The reality is that 'Big Business' is equally to blame for this state of affairs by mounting such a weak moral argument against taxation....in fact against the way government is structured.

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Andrew Sheldon www.sheldonthinks.com

Ruddy deceit will increase sovereign risk

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Unsurprisingly the major miners have come out and made very strong statements about the new ‘resource rent’ tax being considered by the Australian Rudd government. There are a few things we need to acknowledge:

1. These companies often buy into these projects – If they government ‘suddenly’ adopts this policy, they will damage the sovereign risk rating of Australia, and they will thus increase the cost of capital levied upon all business.
2. Any government which has bought a mining resource will sue the Australian government, i.e. Xstrata, BHP Billiton will sue the Australian government for unfairly targeting them, and the taxpayer will pay!!
3. These companies in most cases had to find these resources. The idea that these resources are ‘owned by Australians’, and therefore have the right to apply any arbitrary tax is grossly unfair to investors. Deceitful and opportunistic parasitism you could say.
4. Rudd was flagrantly dishonest by suggesting that resource companies only paid $8 billion on its $80 billion in earnings. He failed to acknowledge that they also paid resource rent, income taxes, and actually pay 43% of their profits in tax – compared to 30% by the banks
5. This is the 2nd time a Labor government has gone after the resources sector – the last time they proceeded to adopt a ‘gold sector’ tax, which was previously royalty free, even though they pay income taxes.
6. Regardless of whether there is a new tax or not – consider the losses caused by fund managers – yes your fund managers – when the Rudd government without any warning decided to adopt this very ‘opportunistic tax’.

This is a very deceitful path by Rudd because it highlights the lack of responsibility of this guy. He wastes billions on flivilous expenditure over the last 2 years, and now he looks to the most productive sector of the Australian industry, and kicks it in the knees. Absolute parasite.

Can I say to Australians...there is something you should never do...elect a person with a detached sense of reality into office. i.e. Bureaucrats. The second is....don't create opportunities for them to 'divide and rule'. Rudd wants you to accept this tax as 'easy or uncontroversial' tax money because he thinks mining employs only 3% of employment, and in the short term it will capture money for government right, but long range (which Rudd doesn't care about) it will marginalise Australia in the global mining industry. Mining services will shift overseas, income will shift overseas, geologists will shift overseas. More companies will be run from London.

He is destroying australia's long term prospects for his short term political gains. He wants to use the money to buy concessions so he can convince you to vote for him. I don't even think the policy will be adopted. He will backed down after the election, and those 'promises' will be dropped. Its all smoke and mirrors. Get rid of him! Better still get rid of them all - vote for a libertarian. They are not perfect, but at least they are destined to leave you alone.

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Andrew Sheldon www.sheldonthinks.com

Have your cake and eat it too

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Government is without a doubt the most unaccountable organisation that was ever conceived...am I am not just talking about third world governments, or some rogue states. For my part I hope that there are some rogue states like Iran in the world. Not because I like their policies or thought process, because they are most certainly anti-life philosophies underpinning them. The reason why its good to have some recalcitrant states is because they establish some sense of opposition to Western governments, when most Western governments are all too ready to align themselves for the sake of some global cooperation. The problem of course is that all the rogue states are anti-intellectual, collectivist tyrannies....much like Western governments, just more extreme, so they are by no means an answer.

Its a sad fact of reality that governments have established this bipartisan policy of not criticising each other. Its standard practice not to comment on another countries policies. Australia is forgiven for its treatment of aborigines, the USA is forgiven for its offshore torture facilities, Western Europe is forgiven for trading with the Middle East terrorists. There is an unsavoury acceptance of other governments practices. In Asia, for a long time governments were quiet about political assassinations in the Philippines, outside attitudes to Malaysian former PM Mahathir were equally feeble after he trumped up charges for Anwar.

Domestically the same pattern appears, but with some differences. We can recognise that political parties have rules of engagement. Firstly I might say that people might consider rules of engagement a sensible practice given that there must be national secrets that should not be used as a basis for embarrassing a political opponent. But I would argue that there is considerable ability for two parties in a two-party system to act in unison for their own interests, and that their long term interests can be systematically entrenched. This is afterall why the two party system has established itself in most countries, and retains entrenched. Even where there are more parties, they still align into two coalitions. Sometimes these coalitions comprise up to 15 parties. Its rediculous. How can you have any integrity within a coalition of parties. I personally find it improbable to have a coalition to have a coalition within a group of MPs. This is the problem with democracy. It places the group above the facts. Conveying an argument is subordinated to the need to win the 'numbers', not with arguments but through affiliation. Loyalty buys you a place at the table. If you don't take the place someone else will, and given that all these MPs want power, and they think they are going to change the system later, they all falter as leaders. They become a shadow of the values they once believed.... that is if there was any good in them in the first place. Personally I think they are pretty well born fascists out of the crib. Basically their attitude is - the electorate is too stupid so we have to tell them how to think. I don't dispute there are a lot of stupid, unthinking people, but they rebulk my approach of attempting to educate them. Basically they want to distort people's sense of reality, afterall they never had a good sense of it anyway. You cannot live in the political system and have a sense of reality. Its all about manipulating people into thinking you are serving them, but the fact is, they are just establishing a system which demands a need for them. Basically the system involves the following dynamic equilibrium:
1. Pro-business: Governments offer policies of either grants or tax concessions to appeal to the aspirational.
2. Pro-unions: Governments offer policies that increase regulation, make unionism compulsory,
3. Welfare: Governments offer welfare recipients generous increases in benefits, however within a few years these are eroded by inflation.
4. Families: You offer tax cuts and concessions which are eventually eroded by inflation.
5. Emergencies: The governments create a need for new taxes. The latest scheme is of course indirect taxes. Firstly it was consumption taxes (GST, VAT), now its greenhouse carbon credits. This is a nice way of applying an energy tax. Energy taxes are great because they encourage energy savings and at the same time its a commodity at the centre of global consumption, and once you have established the system, its easy to increase the tax. It doesn't matter whether the public good has been served, so long as people buy into the simple slogans that support these taxes. My favourite is 'Speed kills' as a justification for fines on speeding cars. Its a very creative variant of the scheme 'Cigarettes kill'.

The great aspect about consumption taxes is that they actually rise with inflation like progressive income taxes, but they are better because they are easier to collect. You just have to control businesses, not a lot of non-compliant individuals like me. Having offered all these concessions you need a national emergency to create new taxes, e.g. Greenhouse carbon credits trading. You could be forgiven that the Earth will have a heat wave in a few years. You will find that the evidence will turn against greenhouse in a few years, but not before a new tax has been adopted called emissions trading. Maybe governments bunk the idea of emissions trading at that point...maybe. But only if they decide....'Well the economy is so bad, why don't we just collect tax on energy and administer government-funded research into energy development'. Of course it will be for the common good. It always is! And you will live on hope because you will not earn enough under their system to live with much else.
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Andrew Sheldon www.sheldonthinks.com