(HT: Helen Dale)
In the interest of full disclosure I should declare that Tim Watts is my Member of Parliament. It is a good speech and makes a nice change from when ALP MPs were demonising Hayek.
A couple of thoughts – I have known otherwise sensible people to hold views of IP that range from “All IP is sacrosanct” to “All IP is theft”. My view is that the current IP regime over-protects IP – as I wrote in this 2004 piece joint with my RMIT colleague Jonathan Boymal.
Tim Watts makes the argument that he’d like to see IP firms starting up in Australia. Well he needs to talk to both Joe Hockey and Andrew Leigh – both of whom, for much the same reason – tax greed, are doing all they can to sabotage innovative business opening in Australia or coming to Australia. Here is Hockey’s latest idea:
FOREIGN investors face a new hurdle as Joe Hockey declares he will take their tax affairs into account when considering their Australian deals amid a global crackdown on corporate tax avoidance.
Alarmed at the potential loss of federal revenue, the Treasurer warned that tax arrangements would become a major factor in foreign investment approvals, given their growing impact on the national interest.
Mr Hockey, who has the final say on all big foreign investments, took the new stance as he stepped up the case for global action on the “significant risk” to revenue from profit-shifting by large companies.
Here is Leigh saying Hockey is being too soft:
Since coming to office, the Abbott government has talked a big game on multinational profit-shifting. Unfortunately, all it’s done is water down Labor’s sensible reforms to ensure that multinationals pay their fair share.
To be fair – that was last week.
Here is the thing; IP is vulnerable to expropriation by government through excessive taxation, or simple outright theft. Look no further than what happened to the tobacco companies. Now many of my lawyer friends tell me that the tobacco business wasn’t really an expropriation because the High Court ruled in the government’s favour. How reassuring is that to IP owners – not only does the government take your property, but the courts rule in favour of it?
So while everyone is worrying about private expropriation of IP, nobody is worrying about public expropriation. Google, Apple, Starbucks etc. are holding their IP in low-tax regimes because they know that their IP won’t be expropriated through excessive taxation in those jurisdictions. The fact that those firms – and others like them – won’t register their IP in Australia is an indictment of out IP policies. It is too hard on private usage and too soft public expropriation.