Tasmanian Times


Corporate tax cuts: the new ball tampering …

*Pic: Thomas Hawk, Flickr … “In politics the dismissed Small Business Minister, Bruce Billson, took on a new role with the Franchise Council (FCA) in March 2016 while still a member of parliament. A parliamentary committee has sought to censure … but PM&C cleared him of course …”

The pious reaction to the cricket ball-tampering episode is nauseating. It’s said to be unAustralian. Hardly. The sanctimonious reaction misses the fact that there is now a new permission, a-whatever-it-takes permission pervasive at all levels, where the boundaries of behaviour have melted.

In politics the dismissed Small Business Minister, Bruce Billson, took on a new role with the Franchise Council (FCA) in March 2016 while still a member of parliament. A parliamentary committee has sought to censure … but PM&C cleared him of course.

The clear conflict of interest evaded Mr Billson’s consciousness. The prevalent culture of permission ignores boundaries, has little ethical compunction and embraces self interest with all the enthusiasm of fornication (more of Trump later).

What is interesting about Billson’s breathtaking bit of ball tampering is that he received remuneration, not directly, but through his company, the very Agile Advisory. This is particularly relevant in the light of the Government’s massive proposed corporate tax cuts.

With a corporate tax rate of 25% there is considerable incentive to structure salary receipts through a ‘service company’, which, with deductions for outgoings, means an effective tax rate that is even lower. This is not new of course but the incentives have become more considerable for corporate captains on high marginal rates of tax to restructure their affairs.

Essentially this means the highest income earners will pay tax at the same marginal rate as the poorest wage earner. This becomes effectively a flat rate of income tax for some but this hardly concludes the revenue implications of this huge tax cut.

The arguments in the corporate tax debate have been well aired. Most benefit, as has occurred in America, will go into share buy backs that enhance corporate value or shareholder dividends, not investment or productivity gains.

Of course the current government peddles a narrative of ‘jobs and growth’ neither of which will be particularly immediate but what is more significant is the fiscal consequence.

The hit to revenue without commensurate fiscal contribution means the deficit will be compromised and expenditure on basic government services rigorously restricted. Remember the hysteria of ‘debt and deficit’? The rhetoric may have subsided but the hangover remains. ‘Debt and deficit’ remains a ‘natural’ break on expenditure and that is the real government intention – to strangle the capacity to build social programs. Despite protestations to the contrary the government is in no hurry to correct either the deficit or the underlying fiscal position, which corporate tax cuts will compound.

This seems contradictory and so utterly at odds with the rhetoric it entreats explanation. While not necessarily some ‘class war’ it is, though, part of a very fundamental long-term ideological battle to choke government outlays and thwart any future social platform. It is deliberate, intentional and a consciously conceived libertarian ideology of government in miniature.

Once you establish the fiscal barriers, you don’t have to legislate to undermine Medicare or hospital funding or pensions or welfare – it simply becomes unfundable and collapses under the weight of inadequate investment. The alternative is to raise taxes or revenue and this then shifts the narrative onto the Coalition home turf of tax.

This is the reason for the hysterical, hyperventilated reaction to Labor’s proposed removal of dividend imputation credits. It targets generous tax concessions to the well-off that bleed the budget, providing a basis for both budget repair and social programming.

But this also alarms business. With a lower tax rate, tax concessions have an even more lucrative impact on profitability and lowered tax liability. Already miners are nervously shielding one of their most generous concessions – the diesel fuel rebate – worth a staggering $21 billion over the forward estimates or $4.5 billion a year. Removing concessions is a merited and strategic alternative to tax increases or repealing tax cuts.

Battle is joined and no one should underestimate the long-term titanic ideological confrontation being waged.

The mentality was neatly summed by a mining executive entreating the then incoming Western Australian Labor government not to increase mining royalties. Look to alternatives, he argued, like an increased GST. What the corporate captain was suggesting was that the public should shoulder social and infrastructural spending. Business simply rides the rails of social infrastructure in pursuit of profit, the dividends from which are whatever jobs materialise.

We once had a civic society whose structural strength allowed business to thrive in a conducive and mutually reliant symbiosis. That structure has been abandoned and its values have dissolved providing permission for the pursuit of whatever-it-takes. The genius of this new narcissistic morality is, of course, Donald Trump who has extraordinary difficulty recognising ethical boundaries, even those between (illegal solicitation) prostitution and just having a good time. Ball tampering is not new but it has become the new normal.

*Dr Michael Powell is Adjunct Researcher University of Tasmania

ABC: Darren Lehmann steps down as Australian cricket coach over ball-tampering scandal

Canberra Times: Sandpaper, lies and videotape: Warner fingered by CA as architect

Author Credits: [show_post_categories parent="no" parentcategory="writers" show = "category" hyperlink="yes"]


  1. Simon Warriner

    April 2, 2018 at 8:08 pm

    Perhaps the fuel tax rebate issue is emblematic of a more profound problem, namely the complete and utter mess our tax legislation is in. I suggest we start again from scratch, with two simple rules applied to the drafting of the new tax act.

    No lawyers or accountants allowed to be involved in making the rules, because the current system has devolved into a trough for those two professions to feed at, endlessly, and at the taxpayers expense.

    10 pages of A4 print, 10 point, double spaced, both sides. If our legislators cannot say what needs to be said in that sized space then tough, and maybe it will focus their minds on the state of our education system for once. Even the tax office does not understand it’s own Act and runs off to the High Court for guidance more often than it should be doing in an efficiently and effectively governed nation.

  2. michel Powell

    April 2, 2018 at 12:52 pm

    It is an interesting debate about the Diesel Fuel Rebate. Certainly as the Conversation article alludes to it is a complicated issue but it can be essentialised.

    Let’s be clear about the misuse of the rebate. The ‘habit’ of diesel migrating from the farm tractor to the Toorak Tractor and on-road use is notorious, and illegal if common. But that is true of the numerous ‘business’ deductions that seem to migrate to cover personal expenditure – a lurk unavailable to the common taxpayer. The whole area of small business concessions and deductions is a minefield.

    I would point out that I am not only an academic but a pastoralist too, so I am very familiar with the issues facing farmers.

    My concern however is solely with the use of the Rebate by the mining industry, which not only receives the Rebate but is also able to deduct the total (net) fuel bill as well. For an industry that avoids its contribution to tax in Australia to be subsidised twice seems a bit unnecessary.

  3. Christopher Nagle

    March 31, 2018 at 10:59 pm

    While I think that Michael has nailed the issue of the ‘melting of moral boundaries’ at a lot of levels, what he and most other critics of corporatism and political administration miss is that this phenomenon isn’t just about malfeasance in the management of the more obvious forms of social power.

    The elimination of boundaries equally affects the social realm and the human rights crowd that administer it through the education, health, welfare and large slabs of the social aspects of legal and political systems.

    If one systematically separates liberty and rights from the context of social and moral agency, and the obligations and training to meet them that give life to those artefacts, one in effect strips out the internal controls that give individuals disciplined, coherent and other regarding behavior, leaving naked egoism as the only thing left standing.

    Thus the business of building socially robust characters and the system of social reproduction slowly die, only to be seamlessly taken over by the Pied Pipers of Cool, who represent Sales and Marketing inc…and the proud sponsors, who take the children to the magic mountain of consumerland and endless indulgence, where fantasies and reality merge and adolescence becomes permanent, whether the social product becomes a banking apparatchik, a professional cricketer or welfare loser. No difference!

    Sales and Marketing Inc loves vulnerably naked and wobblesome egoes, because they can be sold and sell themselves anything. Its totalitarian language of persuasion takes over practically all social discourse, reducing it to garbage. And everyone uses it.

    Honesty, integrity and the strong existential grounding and compass that that requires give way to self absorbed rationalization, short cutting, excuses and a moral sensibility that sees the world in terms of what it can get away with, without remorse, or shame, or regard for others, or any sense of the long view or larger consequences.

    Tears are for when one is either unlucky or stupid enough to get sprung and there is an audience that can be won over by them, or at least mollified sufficiently to not ask too many hard questions about a culture that is drowning in its success fantasies, greed, ambition to win at any cost and preparedness to loot what is left of the common good to get it done.

    However, social humanitarians are actually a lot more sophisticated than that in some ways.

    The current Northern Territory Royal Commission inquiry into the ‘abuse’ of children in detention is a very accomplished sleight of hand that conveniently obfuscates the reality that their excuse and rationalization intensive freebie libertarianism has destroyed what was left of the social infrastructure still extant in aboriginal communities in 1970. They weren’t exactly running on all cylinders then, so the cloying grasp of indulgence ideology that has degraded social governance everywhere else, has reduced them to absolute chaos.

    And that folks is no different to the destruction of our natural environment, or the irresponsible skewing of wealth, income and taxation, or government corruption…

    What better mechanism for diverting attention from the social catastrophe they have caused than a blame shifting show trial of the low level detention centre regime personnel who have to cope with pathologically dangerous, ultraviolent and inconsequential children who have never been socialized and are completely and remorselessly out of control….because no one has ever stood up to them or shown them how to behave or upheld any standards, because all the ‘authoritarian’, ‘repressive’ and virtue centred modeling templates for that have been systematically destroyed.

    Our social humanitarian brothers and sisters are as dysfunctional and public relations effective in managing social perception of that as their corporate cousins.

    Their self ascribed moral ascendancy is not just a con, it is entirely self delusory, and leaves them in no position to point the finger at anyone. A little self reflection and humility might not go amiss.

  4. Russell

    March 31, 2018 at 11:28 am

    Which politician pays for their own fuel? Or living expenses? Or meals? Or mega-superannuation? Or holiday transport? Or trips interstate to buy another bit of prime real estate to add to their portfolio? Or trips and accomodation to meet up with their latest squeeze? Or legal costs when they fall foul of the law? da de da de da de da, ad infinitum….

  5. Russell

    March 31, 2018 at 11:23 am

    Re #9
    And why shouldn’t they either?

    I know of students claiming their fuel to and from their classes, and truckers claim their car fuel to and from work at the depot.

  6. Russell

    March 31, 2018 at 11:19 am

    Re #9
    “I did not know that farmers could get a diesel fuel rebate on road going vehicles.”

    Sure can. Gotta get your parts from town to run your business in something.

  7. Pete Godfrey

    March 31, 2018 at 10:24 am

    #8… Lovely bit of history Jon. I did not know that farmers could get a diesel fuel rebate on road going vehicles.
    I do know that boat owners can, though. The rebate is supposed to be for non road going use of diesel.
    Like you point out, rorting is the game.
    The likes of the Sheriff of Nottingham are still running the show in their favour.

  8. Jon Sumby

    March 31, 2018 at 12:24 am

    Below is a link to a good discussion on the topic. It can be rorted though. I remember what were called ‘Toorak tractors’ wherein rich people would have hobby farms to minimise tax. As part of this they would register their Range Rover or Mercedes 4WD to that address.

    This car would only be used to ferry their kids to the private school and then on to the ‘ladies-who-lunch’ social circuit, however as a registered farm vehicle their accountants claimed the diesel rebate in full … hence the term, ‘Toorak Tractor’.


  9. Wining Pom

    March 30, 2018 at 5:47 pm

    #6 … The rebate is not all of the tax, though. I claim about 18c a litre for my truck, but 30 odd cents for the off-road tractor.

  10. Simon Warriner

    March 30, 2018 at 3:59 pm

    Re #4, Mike … Where was I defending the trucking industry? I was simply pointing out that something claimed as a concession to the mining industry was nothing of the sort. Other than that, you are pretty much correct.

    Re #5, WP … Thanks for telling me something I did not know. It seems to make the tax kind of pointless, doesn’t it?

  11. Wining Pom

    March 30, 2018 at 8:34 am

    #3, ‘You can claim fuel tax credits for eligible fuels you use in heavy vehicles, including heavy emergency vehicles, travelling on public roads if the vehicle meets all the following conditions:

    It is used in carrying on a business.
    It has a gross vehicle mass (GVM) greater than 4.5 tonnes – diesel vehicles acquired before 1 July 2006 can equal 4.5 tonnes.’

    Road Transport Australia.

  12. Mike Adams

    March 29, 2018 at 9:45 pm

    Despite Mr Warriner’s defence of the diesel fuelled trucking industry, I would suggest that the frequently appalling state of our road surfaces is directly attributable to the trucks they drive.

    Tasmanian roads, even the most recent, quickly show deterioration, especially on bends, gear changing points on hills, and before traffic lights and similar impediments to free-flowing traffic. The size, power and speed of the present generation of trucks applied to a shallow tarmac covered road surface probably exceeds the power of the road roller that installed it, hence the ruts, potholes and the short lived hopeful patches applied by the authorities.

    In my view they should pay a lot more: provided that the government of the day didn’t scruff the money for something else politically desirable.

  13. Simon Warriner

    March 29, 2018 at 8:05 pm

    Pardon me for my impertinence Mr Powell, but the diesel fuel rebate is not a “generous tax concession”. It is recognition that the fuel is not being used “on public roads” and therefore should not incur the heavy-vehicle levy that is built into the diesel pump price to capture a contribution from the transport industry for the damage their vehicles do over and above that done by passenger traffic which is/was predominantly petrol powered. Other nations do it differently, eg NZ where diesel users are required to pay a road user charge based on the distance traveled each quarter, on top of the diesel fuel price which is significantly cheaper at the pump than it is here.

    The argument it is a concession is a Green lie that you seem to have fallen for. It is simply the repayment of a tax collected too earlier in the process for legitimate businesses, not subjected to that tax, to avoid paying. Farmers, foresters, fishermen, tourism operators, and miners claim it because they do not use the diesel on the road, and so are entitled to not pay the road user tax built into the pump price of diesel. It is the failure to understand such a simple issue that damages the credibility of academics when they engage in public debate of this nature.

    On the major thrust of your article, you might be correct in asserting that our national leadership style has made such ball tampering inevitable, but the flaws inherent in the party structures that our leaders are sourced from generates the inevitability of that leadership style, and its associated corruption, unless and until the public understands that nothing will change. On that score, Trump is no leader .. he is simply another data point tracing a trajectory to dystopia.

  14. Mike Bolan

    March 29, 2018 at 1:13 pm

    A vital means of helping disparate businesses, individuals and groups to contribute to social goals, standards and objectives, is to actually know what they are! That information is unavailable in Australia because the federal government has provided no vision, direction or plans for our future. Instead they focus on themselves and assuring that their ‘mates’ can profit from our country and thus justify hiring the ex politicians when they retire to spend more time with their families.

    Australia has become institutionally corrupt in the broadest sense as our publicly funded institutions divert their priorities to favouring political and other ‘mates’ at the expense of taxpayers and others.

  15. TGC

    March 29, 2018 at 10:41 am

    All of this well illustrated in some of the contributions made on TT

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