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 not 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 has little to do with it. 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 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.
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
Funny thing is that there are opportunities galore for Shorten to shoot holes in both the Con parties but he’s invariably mia on almost every issue. It’s probably a Labor strategy to keep him out of the public eye given his bumbling public speaking and inability to prosecute a case without resorting to inane zingers and slogans. They are clearly hoping that Turnbull arrogance and incompetence will carry them over the line. All of which doesn’t augur well for the next government unless Shorten can be moved on like Hayden was – and Hayden was a far more deft politician than Shorten will ever be.
Jon,
I don’t know about Shorten. He is no great public speaker certainly, but he seems to have stopped the fairly consistent shooting themselves in the foot, Dastyari notwithstanding. The verdict will be in when the parliamentarians referred to the High Court are dealt with. That will sort it out one way or the other.