Thank you for smoking

It’s a great movie if you haven’t seen it.

Today David Leyonhjelm thanked smokers for their contributions to treasury in a speech to the parliament.

A crossbench senator has thanked Australia’s smokers and attacked successive governments for increasing tobacco taxes in a speech in Federal Parliament.

Liberal Democratic Party Upper House representative David Leyonhjelm voiced his gratitude to smokers for the $8 billion they provide in tobacco taxes each year.

“Your generosity to the nation’s Treasury is truly staggering,” he told the Senate.

The ABC is in shock.

At the time, former Labor prime minister Kevin Rudd argued the increases were necessary because tobacco-related diseases cost more than $31 billion to the national economy annually and cause 15,000 deaths each year.

The Federal Government’s Quit Now website lists the habit as the largest cause of death and disease in the country.

It estimates 50 people die from tobacco-related illnesses each day in Australia.

They are probably not used to hearing an alternate perspective on this and so many other matters.

The Henry Review identified ten taxes that raised 90 per cent of total Australian tax revenue. Tobacco excise is one of those ten.

Anyway – I graphed the percentage of tobacco excise to federal health expenditure over the past few years and going forward. Data from 2007-08 are from the Final Budget Outcome for each year, while the data from 2014-15 to 2017-18 are from this years Budget Papers.

Smokers - Health

Smokers pay for a lot of Australia’s health budget (of course the excise revenue goes into consolidated revenue first) and that is before we consider what they pay in terms of the income tax, medicare levy, and so on.

Non-smokers are clearly being cross-subsidised by smokers.*

Now we can quibble if that is a good or bad thing. What is happening is that the health lobby want to get their hands on that loot and be in a position to spend that money themselves rather than have it go into the consolidated revenue pot and get allocated to the benefit of all Australians (to the extent that government spending benefits anyone).

As we reported last month the WHO are having an anti-tobacco conference this month in Moscow – no talk of a anti-Putin boycott as far as I’m aware – and one of the proposals is for tobacco excise to increase to 70% of retail price and for that money to be spent solely on tobacco-control programs. By that we should read the anti-tobacco lobby gets to spend $8 billion to $10 billion each year given each other research grants and the like.

Now Australia hasn’t signed up to that – but can we be sure that some health department official won’t sign up to that “aspiration”, and so obligate the Australian government into a promise to divert a subsidy from smokers to non-smokers into a subsidy from smokers to public health officials? Without some clear guidance from the government a fairly low-level official in a spending portfolio might just get to reallocate one of Australia’s big tax bases.

* no doubt someone is going to point to the $31 billion figure that Kevin Rudd is quoted as having bandied around. See Eric Crampton demolish that number here.

Update: Speech here.

Posted in Budget, Take Nanny down, Taxation | 12 Comments

The ABC are just rent-seekers

The ABC is not a commercial network so its revenues are not a function of its performance, but rather of its ability to persuade the government of the day to increase or maintain its budget.

That’s Malcolm Turnbull writing in The Drum.

He then goes on to discuss the differences between a commercial and non-commercial operation.

A commercial broadcaster called on to save money will always try to preserve its programme budget – cutting that will prejudice their ratings and thus their revenues. A public broadcaster, on the other hand, could, if it wished, save money in the easiest (and laziest) way by simply cutting programming and in particular cancelling new shows or new series.

I think that’s exactly correct. Where I disagree with Malcolm Turnbull is in his view that it would be possible for a non-commercial operation to mimic a private operation. He is exactly wrong when he says:

Those programming decisions will often be controversial, whether it is dropping or moving a news programme or not renewing (for example) Janet King. But they are decisions for the management and board of the ABC, not the government.

Programming decisions should be a matter of consumer preference not ABC management preference. If the ABC is not responsive to consumer demand – by design it isn’t – then it should be accountable to the electorate and taxpayers via the government. Quite rightly a media corporation – the largest media organisation is Australia – should not be accountable to just the government.

That is why the ABC should be privatised. At present the ABC is either totally unaccountable or a threat to democratic values. A privatised ABC would be neither.

Posted in Federal Politics, Media | 45 Comments

… or not.

Tony Abbott is being quoted on twitter

Indeed. Yet the tabloid press has been running hot on this story.

The 26-year-old made headlines when she stripped naked in an MCG corporate box on Grand Final day on Saturday. But, despite being fined $300 and spending a night behind bars, she says she has no regrets.

Hmmmm. So the lesson is, “We’re a free country and shouldn’t tell people what to wear, as long as they wear something.”

Posted in Libertarians don't live by argument alone | 49 Comments

You can out dumb The Age

This morning Terry McCrann made a huge call:

I doubt though that we have ever seen a more astonishing example of the combination [of the raging left-wing mindset and bias] than Monday’s breathless denunciation by The Age and its Sydney Morning Herald clone of Australia’s biggest listed companies for supposedly avoiding tax.

Well step up the Australian Labor Party. They pushed the great corporate tax lie in Question Time yesterday and got belted.

“Why has the PM walked away from closing $1.1 billion of tax loopholes for multinational corporations?” Shorten demanded in the first question to Tony Abbott of the week.

Abbott almost skipped to the podium. “Curiously, Madam Speaker, the former government last year announced a crackdown on large foreign multinationals accessing, R&D tax concessions,” he said.

“They didn’t actually get around to legislating it. We are now getting around to legislating it.

“We are doing the work they said they’d do and didn’t.” This was the moment some Labor types might have privately smacked their own foreheads while exclaiming, “Doh!”.

But no. They didn’t, they doubled down and continued that line of attack. As the AFR reports:

That almost six years of the report’s time period was under Labor’s stewardship was a bit – ahem – inconvenient. But the current Labor leadership took a punt to focus on the Abbott government’s actions over the past 12 months.

It was pitiful. The only real entertainment was watching the magnificent Bronwyn Bishop belting the opposition even harder than the government was.

Terry McCrann points to an interesting issue:

What also spoke volumes was the story’s non-appearance in The Age’s — still — credible stablemate the Financial Review. These days the Fairfax tabloids share the “big” stories. The Fin chose not to share this one.

Better than that – the AFR has published articles rubbishing the report and implicitly criticising its stable mates.

I should add that I can understand why The Age might not understand how the corporate tax system works, but the ALP – the former government – should have a better idea.

Posted in Taxation | 31 Comments

Wednesday Forum: October 1, 2014

Posted in Open Forum | 317 Comments

How is that plain packaging working?

Quit Victoria and the Cancer Council Victoria say cigarettes can be bought at 8000 places, which makes them “more available than bread and milk”.

Doesn’t sound like consumption is collapsing as we’ve been told.

Mind you the underlying motive is for politicians to get more money.

It is calling on all political parties in the November state election to commit to introducing a licensing scheme for tobacco retailers that would help reduce availability of cigarettes in the long-term.

The list of approved smoke sellers would also have to be available on a public register.

In time, no doubt, approved smokers will be branded, or tattoo’d, or made to wear a yellow cigarette butt on their clothing.

Posted in Take Nanny down | 99 Comments

Please tell me you are joking, Michaelia?

 

Cash

Read the following from the pernicious Workplace Gender Equality Agency and weep.  No, read the following and get really, really angry.

We have a government in power which is committed to deregulation and removing red tape and yet they have done nothing to rescind these ridiculous requirements.  Please, Michaelia, tell me you are joking in your support and that you are working day and night to have this complete drivel removed from the regulatory landscape.

And check out the last par: it is complete bureaucratic mumbo-jumbo – and to think that someone (OK, a committee) let this go to print.

Minimum standards represent the standard expected to achieve a particular objective under a GEI. They are additional compliance requirements for large businesses to better support gender equality and diversity in the workplace and represent the minimum an employer must do to demonstrate a commitment to gender equality in their workplace.

The Minister will, by legislative instrument, set minimum standards in relation to specified gender quality indicators, specified relevant employers and specified reporting periods.

Following consultation with industry, peak bodies and community groups, the Minister has set a  new minimum standard as outlined in the Workplace Gender Equality (Minimum Standards) Instrument 2014that applies from 1 October 2014 in the 2014-15 reporting period.

In order to meet the minimum standard, a relevant employer with 500 or more employees must have a policy or strategy in place that specifically supports gender equality in relation to one, or more, of the following:

  • GEI 1 - gender composition of the workforce
  • GEI 3 - equal remuneration between women and men
  • GEI 4 - availability and utility of employment terms, conditions and practices relating to flexible working arrangements for employees and to working arrangements supporting employees with family or caring responsibilities
  • GEI 6 - any other matters specified by the Minister: sex-based harassment and discrimination

A formal policy or formal strategy is a written policy or strategy that has been approved by human resources and/or management. A formal policy is usually widely communicated and available to, and accessible by, all staff. A formal strategy can also be widely communicated although it usually deals with the allocation and deployment of material and human resources and requires executive decision. A strategy may exist without a policy and vice versa but both may also coexist and support each other.

Posted in Uncategorized | 76 Comments

Investment certainty for everyone!

Did anyone notice the rent-seekers out in force today with full-page advertisements (at least The Australian had the sense to head it ADVERTISEMENT, I guess other papers did too) on behalf of a group called the Investor Group on Climate Change.

If you want to know who are the members of the Investor Group on Climate Change, they are overwhelmingly the industry super funds plus a number of rent-seeking funds managers/investment companies.

Frankly, this plea for investment certainty leaves me completely cold.  The whole point of companies and investors is to manage risk, not rely on ongoing favourable policies from governments.  And to take such a bet on the government of the day not seeking to change the terms on which the renewable energy industry is subsidied by taxpayers and consumers was always a big call.

Mind you, there is never any consideration given to the impact on the conventional electricity suppliers and their investors who were adversely affected by the imposition of the souped-up RET, in particular.  Tough titty, is the rent-seekers’ view, even though this investment uncertainty led to substantial impairments to the balance sheets of coal fired generators and others.

The talk on the street is that the RET will be altered; even the renewable energy sector needs some changes because there is effectively an investment strike at the moment.  Carving out the aluminium industry is one possibility (aluminium is a massive user of electricity), but this would create additional distortions.

If the government is not prepared to close down the RET, the best thing would be to set a much lower figure, one which is likely to be close to or below the 20 per cent figure in 2020. The small RET scheme should be closed immediately.

Here is the special pleading:

The savings of more than 10 million Australians are invested in a clean energy future – why undermine the Renewable Energy Target?

 

Dear Prime Minister,

We’re no different to any other nation. The health of our economy is vitally dependent on investor confidence in government and the stability of its policies.

For years we’ve been investing the savings of Australians in projects on the basis of bipartisan support for boosting renewable energy.

This is now at risk. Our investments, together with skilled industries and jobs that the Renewable Energy Target is creating are at risk due to the uncertainty of your government’s commitment to the legislated 41,000 Giga-Watt-hour Target.

The argument has been had and there’s no going back. Australians see reducingthe carbon emissions from our energy supply as the right thing to do – not just for the environment, but also for our economy.We share the view that Australia needs to be growing renewable energy – not stepping back from our commitments.

Investors need predictable Long-term policies to be confident to make investments in the energy sources of the future.This environment requires bipartisanship on the need for more renewable energy,not less.We encourage you not to change that now.

Keep Australia an attractive investment destination.

Support current and future investments made for Australians.

Maintain the Renewable Energy Target.

Yours sincerely,

 Investor Group on Climate Change

The Investor Group on Climate Change (IGCC) represents Australian and New Zealand institutional investors holding over $1 trillion of investments. www.igcc.org.au

 Authorised by Nathan Fabian, IGCC Australia 6′ New Zealand, Level 9,255 George Street Sydney NSW 2000

Posted in Uncategorized | 33 Comments

How is corporate tax calculated?

During the mining tax debacle it turned out that the Labor Party hadn’t even bothered to ask the ATO how much tax the mining industry actually paid. Now it turns out they haven’t even bothered to look up on the ATO website how the corporate tax is calculated.

How company tax is calculated

See the item “Relevant company tax rate” – that is the 30% tax rate. All companies subject to the Australian corporate income tax pay 30%. The question is whether or not there is sufficient information in the public domain to reconstruct that calculation. It is well known that the answer to that question is “No”.

Well well-known to everyone except the Labor Party.

Update: 2dogs suggests that there is enough information in the notes to annual financial statements to reconcile taxation information from financial accounting and tax accounting.

Posted in Taxation | 35 Comments

Daughter water … oh, pleeease

I always regarded this proposed evidence-free and costly regulatory intervention by the spookily named agency, the Workplace Gender Equality Agency, as a test of the government’s commitment to removing destructive and pointless regulation and red-tape. (see below)  Would they remove it as they promised?

JOSH, YOU HAVE FAILED.  YOU HAVE TO BE KIDDING THAT THE GOVERNMENT WOULD ACTUALLY SUPPORT THIS DRIVEL.  DAUGHTER WATER? PAY EQUITY AMBASSADORS? PAY GAP ANALYSIS? PLEEESE …. NO MORE.

What ever happened to the pledge to remove red tape?  This is a case of red tape on steroids.  This government is as much a joke on this stuff as the previous one.

Here are the facts about the gender pay gap:

  • We need to measure the gap using standardised hours.  This is a very big issue for higher paid worker and so most economists would simply conclude that we don’t have good enough data to know what the pay gap is for similarly qualified men and women working the same hours.
  • For lower paid workers, we can completely explain the pay gap through the characteristics of the workers and the jobs.
  • There is no evidence of pay discrimination against low to medium earning women workers.  In fact, low paid women seem to do better than men because the regulations favour them over men (see the research of Deborah Cobb-Clark).
  • If it is true that unjustified gender pay gaps are bad for businesses, they will be competed away.  Imposing costly and pointless regulations is completely the wrong way to go.

The regulatory burden on business of these new data requirements is just absurd.  And what happens with all this pointless, but costly to collect, data but be analysed by inexperienced and ill-informed officials in the WGEA?  Nothing.

As for being named and shamed, these companies should regard it as a badge of honour.

From the Fin:

The workplace gender agency will name and shame 3000 companies that have not carried out formal assessments of pay discrepancies between male and female employees.

The big four banks and accounting firms all get the tick but thousands of other organisations will receive a bottle of “daughter water”, a drink that jokingly purports to help chief executives conceive baby girls.

This refers to research that shows men become more aware of gender issues once they have daughters.

The Workplace Gender Equality Agency is launching a campaign to highlight the gender pay gap, which is at a 20-year high of 18.2 per cent. That’s almost 1 per cent worse than 2013 and means a man earns on average $14,500 more than a woman over a lifetime.

According to data collected by the agency, for the first time this year three out of four organisations have never examined payroll records to see whether men and women are paid at the same rates for commensurate work and skills.

Finance, mining and insurance were most likely to have conducted a pay gap analysis and were most inclined to have adopted pay equality objectives.

Agency director Helen Conway said most employers believed they didn’t have to worry about gender pay ­discrepancies because they paid salaries at market rates or figures set in enterprise agreements.

“Employers are in denial about it,” Ms Conway said. “What we’re saying is, we’d like you to have a look at your data to see if you have a gender pay gap. And if you do, we’ve got some free tools available on our website to help.”

From Tuesday, users will be able to search a database of organisations at inyourhands.org.au to see which have undertaken a remuneration gap ­analysis, and what actions were taken as a result. A pay gap analysis tool will be available. Continue reading

Posted in Uncategorized | 47 Comments