Ross Gittins argues against decreasing company tax rate using economic arguments1, but unfortunately, economics has little to do with it. This is clear from the fact that the tax office has stated that 36% of large companies and multinationals paid no tax in the most recent financial year (2015-2016). It showed that the tax collected from Australia’s biggest companies had declined by 8.7% ($3.7 billion) from 2014-2015, with the number of corporate entities paying no tax increasing by 8%2,3. However, as far as the Liberal Party is concerned, economics is unimportant. That is simply the cover story. What this company tax rate is all about is essentially money laundering. Getting more companies, those that still pay tax that is, to donate to the Liberal party.
This also explains why the government is so enamoured of coal-fired power stations. It is not about energy security. If it was about energy security, the government would not be bothering with coal or gas, because they are finite resources. Sunlight is effectively an infinite resource. It is also not about the cost of power. If it was about cheap power, the government would not be trying to boost coal as a source of energy. The cost of new build coal-fired power is vastly more than the cost of new build solar (2.5 times) or new build wind power (1.25 times), and the cost of solar and wind power are still decreasing, with the former having declined 58% from 2010 to 20144.
Recent developments have also demonstrated that the future for coal is looking bleak, with coal companies going into administration, funding drying up for new mines, and divestment becoming widespread. As Richard Denniss so aptly put it, “even coal is getting out of coal”5. This now happening at a staggering rate.
All logic would tell you that coal is a dying industry, so why do the politicians support it so much? Because they get significant donations from fossil fuel companies, and they want to keep those coming. The only power they are concerned about is not electricity, but their power to generate money for their party. That is dependent on keeping their donors happy, and to do that best they need to be in government. To remain on the government benches, they will do anything; absolutely anything. So as we get closer to the next federal election, be prepared for the worst Duttonesque smears and lies one could imagine. No group of Australians will be safe.
Sources
- http://www.smh.com.au/business/the-economy/wed-be-mugs-to-panic-and-cut-our-company-tax-rate-20171221-h08u70.html
- https://www.ato.gov.au/Business/Large-business/In-detail/Tax-transparency/Corporate-tax-transparency-report-for-the-2015-16-income-year/
- https://www.theguardian.com/australia-news/2017/dec/07/australian-tax-office-says-36-of-big-firms-and-multinationals-paid-no-tax
- http://www.abc.net.au/news/2016-09-08/why-renewables-are-getting-cheaper-all-the-time/7826876
- http://www.smh.com.au/comment/voters-are-burning-politicians-who-wont-ditch-coal-20171222-h098qa.html
