A glaring omission

Yesterday the ABC ran this breathless story:

The first comprehensive evaluation of Australia’s ground-breaking plain packaging tobacco laws shows they are working, the Victorian Cancer Council says.

Fourteen separate studies on the impact of plain packaging in its first year were published today in a special supplement to the British Medical Journal.

Yes – it’s all been a glorious success – from the introduction to the special issue:

Plain packaging in Australia has been a casebook example of effective tobacco control—a policy measure driven by evidence, carefully designed and implemented, and now rigorously assessed. Further, it is set within the context of wider Australian tobacco control, reinforcing the most basic lesson learned over the last half century: action has to be strategic and comprehensive. There are no silver bullets. This issue demonstrates that plain packaging is beginning to deliver on its promise, and an important step forward, but it is still only part of the solution. Australia has learned and applied this lesson well and that is why it has one of the lowest smoking prevalence rates in the world.

Except for one small, tiny, little detail – as Chris Snowdon points out:

The other thing the articles have in common is that none of them—not one—looks at adult smoking prevalence, underage smoking prevalence or cigarette sales since plain packaging was introduced. Most of them are not new—they are reprints or remakes of previous efforts—but none of them look at the one thing that plain packaging was designed to do—prevent young people taking up smoking.

After more than two years, that’s pretty suspicious, but it’s hardly surprising since the rate of underage smoking rose between 2010 and 2013 and tobacco sales rose in the first year of plain packaging. Faced with this dilemma, Wakefield et al. ignore peer-reviewed evidence that shows that plain packaging doesn’t work in the real world in favour of rehashing their own tired old surveys and focus groups which boil down to asking people if they like looking at pictures of gangrenous feet (“they don’t! Plain packaging works!”). Even then, the best they can manage is to say that plain packaging has “prompted smokers to think about quitting”. Never mind the fact that they’re not actually quitting.

Yep – after two years and millions in government grants we now know that the plain packages are pretty ugly, and people don’t like to look at them. Now I suppose that proving the obvious is important but I suspect that if people had found the plain packages attractive the the tobacco companies would have voluntarily adopted the practice long before the nanny state forced them to do so.

So here is the challenge: show us how much smoking as actually declined as a result of the plain packaging policy given the downward long-term trend in smoking. This is what the peer-reviewed evidence says at the moment:

At best, we can determine the plain packaging policy introduced in December 2012 has not reduced household expenditure of tobacco once we control for price effects, or the long-term decline of tobacco expenditure, or even the latent attributes of the data.

To the contrary, we are able to find a suggestion that household expenditure of tobacco has, ceteris paribus, increased. In our forecasting exercise the actual data come close to breaking through the 80 per cent confidence interval. While we do not want to over-emphasise these results, we do conclude that any evidence to suggest that the plain packaging policy has reduced household expenditure on tobacco is simply lacking.

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67 Responses to A glaring omission

  1. kae

    There’s talk of bringing in plain packaging of alcohol.

    Won’t someone save us from the damned nanny state?

    Already there’s talk about restricting drinking hours, again, in an effort to stop bad behaviours supposedly caused by drunkenness.

    Soon we’ll have the six o’ clock swill again.

    People who want to cause trouble will do it no matter when they’re stopped from drinking. In the early oughts I had a boarder, a twenty something female. They would go out at about 9pm, but first prime themselves with cheap bottle spirits from the pub. They didn’t need to drink much when they were out as it was too dear and they’d already be three sheets to the wind.

    How about just enforcing laws which already exist to stop this behaviour? And severely punishing people who assault others.

  2. kae

    I don’t know how to stop the recent social expectation that one goes out to drink and get blind drunk, it wasn’t like that when I was in my late teens, twenties, even thirties. What’s caused this mindset?

  3. Rob MW

    Paper & Peer Review by Rob MW – solus: An aesthetically designed Hill’s Hoist will probably most definitely encourage more hours of sunshine which increases the more than likely risk of skin cancer by a factor of maybe 100 or so, or thereabouts.

  4. Bruce of Newcastle

    The other thing the articles have in common is that none of them—not one—looks at adult smoking prevalence, underage smoking prevalence or cigarette sales since plain packaging was introduced.

    ie lets not look at the black economy since it is hard, dangerous and we might not like the results we get.

    Typical lefties. All the data I see on the black sector of tobacco and cigarettes is it has been given a huge boost by Roxon’s ill advised sanctimony.

    It is quite logical. If you force all tobacco purchases out of sight under counters and in closed lockers in supermarkets you make it much easier for the customer and seller to conclude illicit sales. The seller doesn’t have to pay GST, the buyer doesn’t have to pay excise. Transparency is a cure for illegality, pity the ALP made the whole business unmentionable and opaque.

  5. thefrollickingmole

    I dont suppose anyone has ever pointed out that all the money collected from sin taxes should go into finding cures for said conditions rather than supporting a monopoly of government sponsored parasites and nannies to promote another tax rise for “public health reasons”..

  6. Adelagado

    Cigarette prices have dropped significantly since plain packaging was introduced. I have seen no comments on how that has affected sales and distorted the latest research. It looks to me like the tobacco Co’s have used lower pricing in order to keep their sales up.

  7. jupes

    Dare I say the ABC are Goebbelian in their propaganda.

  8. feelthebern

    Cigarette prices have dropped significantly since plain packaging was introduced. I have seen no comments on how that has affected sales and distorted the latest research. It looks to me like the tobacco Co’s have used lower pricing in order to keep their sales up.

    Really?
    I’m not a smoker, but the prices at the newsagent where I buy my powerball ticket haven’t changed in months.

  9. Bruce in WA

    Cigarette prices have dropped significantly since plain packaging was introduced.

    Like hell they have.

  10. feelthebern

    Chop chop baby.
    Its all about the chop chop.
    But because the luvvies say “there’s not evidence of the chop-chop blah blah blach” means that they are happy relying on their bullshit numbers & narrative.

  11. rich

    It looks to me like the tobacco Co’s have used lower pricing in order to keep their sales up.

    It’s increased because unbranded tobacco is cheaper, and consumers at that end of the market are sensitive to price. Remove brand differentiation and this is a predictable result.

  12. Mr Rusty

    Cigarette prices have dropped significantly since plain packaging was introduced.

    You sir are a complete fucking idiot and tool of such magnitude as to be visible from the Andromeda galaxy.

  13. feelthebern

    Cigarette prices have dropped significantly since plain packaging was introduced.

    Is this the greenfilth narrative?
    Will this be a question from the Q&A audience?

  14. johno

    It’s a rerun of the Great Global Warming Scam. BS science used to pursue a political agenda rather that a search for something we might like to call the truth.

    This sort of crap is possible because politicians fund scientific research and scientists will respond by providing junk science to bolster political campaigns.

  15. Adelagado

    Ciggy prices have dropped…

    “Like hell they have.”

    “You sir are a complete fucking idiot and tool of such magnitude as to be visible from the Andromeda galaxy.”

    If you stick to your favorite brand and pack size you wont have noticed it. But if you are a bit flexible (as you obviously are not) you can enjoy the habit for less.

    http://www.adelaidenow.com.au/news/tobacco-giant-derails-governments-antismoking-message/story-fni6uok5-1226947125455

    http://yesmoke.eu/blog/cigarette-price-war-big-tobacco-comes-out-in-the-field/

    Sinclair, Why is such foul language tolerated on this forum? Its counterproductive you know. I’ve seen it result in the slow death of other forums.

  16. Bruce of Newcastle

    Sinclair, Why is such foul language tolerated on this forum? Its counterproductive you know. I’ve seen it result in the slow death of other forums.

    Its a libertarian forum, Addy, do you want to enforce language laws? Btw I am not a libertarian, I’m a conservative Christian.

    Lefties get oh so prissy about language then acquiesce to the most appalling behaviour by their political representatives.

  17. Adelagado

    “Lefties get oh so prissy about language then acquiesce to the most appalling behaviour by their political representatives.”

    I’m not a lefty. I just think its ultimately bad for business. In my opinion a blog loses credibility when posts that offer an an unpopular view just receive a tirade of foul abuse. Look at Bolta’s site. The most popular blog in Australia, very right wing, but no foul language tolerated.

  18. JC

    Adelle

    Will you shut up. This blog has been going for over a decade and is currently the most popular libertarian right leaning independent blog in oz. Go offer advice elsewhere.

  19. JohnA

    thefrollickingmole #1634316, posted on March 20, 2015 at 1:43 pm

    I dont suppose anyone has ever pointed out that all the money collected from sin taxes should go into finding cures for said conditions rather than supporting a monopoly of government sponsored parasites and nannies to promote another tax rise for “public health reasons”..

    Touching naivete, or gentle sarcasm…well done.

  20. Sinclair Davidson

    Sinclair, Why is such foul language tolerated on this forum? Its counterproductive you know. I’ve seen it result in the slow death of other forums.

    People perceive you to be a troll and are treating you as such.

    Debate and discussion here is robust. Now foul language is not my first preference, but the locals are not my children and I have no moral right to correct their language. I’m also very opposed to censorship but hypocrite that I am, I do censor a very small number of words. I also insist that people are more polite to the female threadsters, but beyond that you’re on your own. So, just yesterday for example, you tried on a smart-arse comment in the Google tax thread and got smacked in the chops. Today you came back for more – perhaps you thought people had forgotten what you said yesterday?

    If you’re a troll I have no sympathy, if not, well be polite, make your points and arguments, let people get a feel for your perspectives, gain some acceptance and then say and do what you like.

  21. Max

    any theories as to why the increase?

    I am a smoker and the only things I can think of are:

    – Plain packaging makes quitting harder as you (and the sales assistant) no longer know which are the low milligrams brands to help weene you off.

    – the warnings are SO over the top that they strain credulity and are no longer effective.

  22. John Mc

    No one, young or old, gives a shit about plain packaging. It just costs too much to smoke. Plenty of people want to smoke more, they simply can’t get an affordable supply of the tobacco product they enjoy. For some people tobacco has been effectively banned through artificial price rises via taxation, which was always the intention of our insidious nanny-state supported by the endless series of shit politicians on both sides. All done so the government gets to say “you can still smoke, it’s a free country, it’s not like we banned anything.”

  23. Pyrmonter

    JC
    #1634465, posted on March 20, 2015 at 4:59 pm

    A bit “uncalled for”. The Forums are one thing; by and large the topical posts are, and I hope should be, free of personal abuse (unless hammy, numbers and their alter egos start serious trolling.) I’ve seen a few “pile ons” here that rather missed the point: debate can be robust andpolite, and is the more effective for being so.

  24. Indigo

    If anyone knows where I can buy black market cigarettes or tobacco in Sydney, can you please let me know?
    Willing to travel.

    Also, will tobacco plants grow in a Sydney back yard?

  25. feelthebern

    Willing to travel.

    You don’t have to travel far.
    Just ask your local newsagent.

  26. Adelagado

    “People perceive you to be a troll and are treating you as such. “

    How on earth can they perceive that? My comments have all been polite and considered. You may disagree with them but they are not deliberately argumentative.

    “So, just yesterday for example, you tried on a smart-arse comment in the Google tax thread and got smacked in the chops.”

    I assume you mean this…

    “Sinclair, you admitted in a recent article that you don’t even really understand how Google makes money. You had no understanding at all of ‘GoogleAds’. You need to educate yourself better about this before you so casually dismiss the idea of chasing Google for a fairer tax return. GoogleAds is raking in hundreds of millions of dollars from Australian advertisers.”

    Sinclair what a thin skin you have. I offer in my defense of the above comment this quote from your earlier article….

    “I suspect many Australians are in the same situation as my good self. I have never advertised on google, and if I’ve ever clicked on a google ad it would have been by mistake. So while I have heard of Google ads, that doesn’t detract from the fact that most Australians consume google products at zero-price.”… ..and “I’ve been using google Chrome as my internet browser for several years, and a gmail account for just as long too”.

    Its clear to me from your comment above you have no idea of the extent or financial income that Google derives from GoogleAds. If you did you would know that everything else they do pales into insignificance. Even a piddly little one man operation like me has paid $48,000 to Google ads in the last 10 years. Your implication that this Google Tax/GST argument is about ‘free browsers and gmail’ shows you have completely missed the point on this one.

    GoogleAds is supplying a service within Australia, and raking in billions, whilst putting tax paying media companies, local newspapers, printers, advertising agencies, pamphlet stuffers, designers, paper makers, etc, etc, etc, out of business. If the Govt doesnt get some tax or GST from Google for this, then the few private taxpayers left like you and me are going to get absolutely screwed to make up the difference.

  27. Stop worrying about it Adelegado.
    You’re welcome. All types are allowed here, some are not as nice as others. Don’t let it worry you.

    I barely remember from one day to the next which website, never mind which thread, never mind which screen name, has had something robust to say to me. Or vice versa.

    We’re all friends here, though it may not at first seem that way. I welcome new blood, as it enhances the learning experience.

    For it is a bloody fool who cannot learn something from everybody they meet.

  28. Sinclair Davidson

    Its clear to me from your comment above you have no idea of the extent or financial income that Google derives from GoogleAds.

    You’d do well if you didn’t assume I’m an idiot. I’m fully aware of how much money Google makes from business with Australians (as opposed to business in Australia). In fact I’ve been using this graphic in my notes on base-shifting that sets out the comparison with an Australian company very nicely.

  29. Pyrmonter

    Sinc

    Do you think the territorial nexus of “residency” can survive as a basis for taxation?

    It’s an odd and, in practice, rather arbitrary concept to be maintaining in a globalised economy. A “natural person” can have Australian tax residence for no other reason than being the beneficiary of a federal government super scheme – that is, almost all former public servants are Australian tax residents, whether or not they’re Australian nationals, domiciled here, or even entitled to permanent residence). It has some advantage in being a bit easier to observe than derivation, but I wonder whether it will be with us in two decades.

  30. Sinclair Davidson

    Residency is the issue – but I’m not sure what the solution is.* The fact of the matter is that governments do not share tax income and for as long as we work hard to avoid double taxation, we’re going to see lots of “under-taxation”. It’s one of those things we’re going to have to live with.

    Also if the Americans would tax their offshore income on accrual and not repatriation into the US, a lot of these issues would go away. But I suspect the US use this aspect of their tax code more or less as a ‘tax subsidy’ to their own MNCs. So they are no reason to change.

    * I do sometimes think that countries should all go back to a source based tax system.

  31. rich

    GoogleAds is supplying a service within Australia, and raking in billions,

    “within” Australia… are you so sure?
    If a Chinese company manufactures shoes outside Australia and I buy online from them… they send shoes to me to distributors in Australia, is it subject to Australian income tax?
    If I buy web hosting from a US Company, is that company doing business “within Australia”? No and No.

    Google is selling business TO Australians OVER and international boundary. Just like the Chinese shoe factory and the US web host are not subject to Australian income tax because they are not based in Australia.

    The reason that the statists and socialists are grubbing for tax from multinationals is to pay for all their prodigious spending programs, hoping to buy votes. The truer measure is for the state to dream smaller so that the private citizen can dream bigger.

  32. Adelagado

    ” If a Chinese company manufactures shoes outside Australia and I buy online from them… they send shoes to me to distributors in Australia, is it subject to Australian income tax?”

    I have no problem with that type of transaction. Theres nothing new about it. The Chinese company presumably pays income tax in China, so China is happy. If an Aussie distributor then on-sells to me I pay GST and presumably they also pay income tax. So the ATO is happy. If the shoes come direct to me from China I pay no GST because its under $1000. (The ATO is also OK with that). If the shoes were over $1000 I would pay GST through customs, so the ATO is happy with that too. So whichever way you cut it tax is paid somewhere. Thats all fine by me. But Google is ‘selling’ GoogleAds’ to me yet paying almost no income tax, or collecting no GST anywhere. (Thats how they can afford those incredible ‘free’ services like Google Maps, Earth and Street View).

  33. Adelagado

    “If I buy web hosting from a US Company, is that company doing business “within Australia”? No and No.”

    True, buts its peanuts compared to what Google is doing.

  34. Adelagado

    GoogleAds is supplying a service within Australia, and raking in billions,

    “within” Australia… are you so sure?

    Well thats the whole crux of the argument isnt it? I say they ARE supplying a service within Australia. If they weren’t I wouldnt have paid them $48,000 over the last 10 years.

  35. Adelagado

    You’d do well if you didn’t assume I’m an idiot. I’m fully aware of how much money Google makes from business with Australians (as opposed to business in Australia). In fact I’ve been using this graphic in my notes on base-shifting that sets out the comparison with an Australian company very nicely.

    Hey I sure don’t think your an idiot. And that graph illustrates this perfectly. GoogleAds earned a billion dollars in Australia but paid just $780,000 tax. By comparison CarSales.com, providing a near identical service, (i.e an electronic advertising medium) earned ‘just’ $184 million yet paid $27 million in tax.

    As the article says… its a loophole.

  36. Ms Dolittle

    Its all about the chop chop.

    Don’t forget the vap vap baby.

  37. Ms Dolittle

    Sinclair, Why is such foul language tolerated on this forum? Its counterproductive you know.

    I, for one, love it when the talk is dirty.

  38. Stimpson J. Cat

    Cigarette prices have dropped?
    You sir, do not smoke(and if you do, reveal the name of your supplier forthwith).
    Consider yourself suitably chastened.

  39. Stimpson J. Cat

    Adelegado
    And incidentally, what Sinc hit you with there, that was the backhand.
    You don’t want to see the forehand(I have).

  40. rich

    I say they ARE supplying a service within Australia.
    As the article says… its a loophole…True, buts its peanuts compared to what Google is doing.

    Well you’d be wrong- you paid $48k to a foreign IT company to dropship you services from their servers in another country. It’s the same mechanism as the US Web host, scale is irrelevant. Not a loophole- it’s working as intended.

    There’s an international market here where multinationals: they locate themselves in favourable tax juristictions. They don’t vote, so location choice is what prevents governments from gouging them or appropriating IP. Google isn’t paying income tax in Australia because it is not headquartered in Australia, just like that Chinese factory that you give a free pass.

    They are complying with rules as written versus rules as intended. Just because you don’t like it or wish it different, it doesn’t change the sound principles on which this tax law is based on.

  41. Typical lefties. All the data I see on the black sector of tobacco and cigarettes is it has been given a huge boost by Roxon’s ill advised sanctimony.

    BoN, the Child Bride came home with an interesting story a couple of days ago: A friend had been offered two cartons of smokes (400 smokes?) at fifty percent off because they were about to go past their use by date. When the person was told there was no UBD on cigarettes, she was told it was embedded in the barcode, but if it was scanned to reveal it, the authorities would be alerted electronically.
    Some of these buggers can really spin a yarn to get rid of stolen smokes.

  42. Adelagado

    Stimpson J. Cat

    You sir, do not smoke(and if you do, reveal the name of your supplier forthwith).
    Consider yourself suitably chastened.

    I do unfortunately, but only on weekends. A pack of 20 Longbeach cost me about $18 today at the local supermarket. I think they cost me more than that 2 years ago.

  43. Pyrmonter

    @ rich – I’ll take the bait.

    If they deliver the goods to you in Australia, then yes, they do make the supply “in” Australia, regardless of what your contract says, where payment is made, or the law of the contract. They’re probably carrying on business here in any event; although serving them might be another matter.

  44. Adelagado

    Well you’d be wrong- you paid $48k to a foreign IT company to dropship you services from their servers in another country. It’s the same mechanism as the US Web host, scale is irrelevant. Not a loophole- it’s working as intended.

    Its only working ‘as intended’ if you still live in the 20th Century. The problem is that GoogleAds is providing a ‘service’ not physical goods. What they provide is not going through Customs, but are we not still importing it? Its a new phenomenon. Prior to the internet I can’t think of any comparable transaction.

    And by the way, scale IS usually relevant in tax considerations. For example the ATO gets GST on privately imported items over $1000 but not on items below $1000. They definitely make a scale distinction with physical goods that are ‘dropshipped’. So why not on services?

    You don’t seem to care that ultimately YOU are going to be picking up the tab for this lurk. If the Govt don’t get something from Google they are going to get it from you.

  45. rich

    If they deliver the goods to you in Australia, then yes, they do make the supply “in” Australia,

    Not according to International tax law and ratified tax treaties. If the factory is outside Australia, what entitles the ATO to collect income tax on a facility based on foreign soil? Does that also entitle the ATO to collect income tax for sales that don’t involve Australia? Imagine China serving a tax bill to a factory in Geelong lol. It doesn’t matter if the business deal is closed in Australia, the true question is “where was the wealth made?” where is the capital, where is the factory?

    Tariffs and duties are the closest thing to taxes on foreign income and they are economic self-harm: paid by local taxpayers. The reality problem is scope creep by a government grubbing for more taxes.

  46. Adelagado

    Pyrmonter

    They’re probably carrying on business here in any event; although serving them might be another matter.

    I think they do. I often get phone calls from Google about how my Adwords advertisements can be ‘improved’. (ie how I can spend more money with them). I’m pretty sure these callers are Australians, but I could be wrong.

  47. rich

    For example the ATO gets GST on privately imported items over $1000 but not on items below $1000. They definitely make a scale distinction with physical goods that are ‘dropshipped’. So why not on services?

    It would be fairer if there was a blanket 10% tax, but then tracking all those micro transactions would erode the amount of tax collected. Due to tax inefficiency, only 10 of taxes out of 115 collect 90% of revenue. If it was a true blanket, ATO would collect LESS tax

    The problem is that GoogleAds is providing a ‘service’ not physical goods. What they provide is not going through Customs, but are we not still importing it?

    So if I pay a graphics designer in Romania to make me a logo, should he pay both Australian and Romanian tax?

    You don’t seem to care that ultimately YOU are going to be picking up the tab for this lurk. If the Govt don’t get something from Google they are going to get it from you

    The government doesn’t need to collect more taxes. It needs to shrink and stop spending money on stupid stuff.

  48. Adelagado

    rich
    #1634677, posted on March 20, 2015 at 9:04 pm

    If they deliver the goods to you in Australia, then yes, they do make the supply “in” Australia,

    Not according to International tax law and ratified tax treaties. If the factory is outside Australia, what entitles the ATO to collect income tax on a facility based on foreign soil?

    But those laws and treaties are based on the traditional idea that in exchange for our cash the foreign company is going to be delivering something solid that can taxed at point of entry or point of sale and hence collect GST. The Govt has to get money from somewhere unfortunately. The GST is in my opinion a reasonably fair way to go about it. A transaction that avoids GST is going to be a problem.

  49. Some History

    Kudos to Chris Snowdon.

    So the “evidence” on plain packaging in question is dominated by two long-time antismoking activists, Scollo and Wakefield. At best it’s fifth-rate, featherweight “research” that doesn’t particularly go anywhere, and, as usual, funded by the hapless taxpayer.
    But not to worry. Enter antismoker wanker-in-chief, the professional fear and hate-monger, Simon Crapman. The job of his propaganda eminence, Captain Pipsqueak, is to take nothing and make it seem like not only something but something incredibly important. According to Crapman, this wonky antismoking “research” conducted by his antismoking protégés is transformed into “A Cluster Bomb of New Research Explodes Tobacco Industry Lies About Plain Packs”:
    https://theconversation.com/cluster-bomb-of-new-research-explodes-tobacco-industry-lies-about-plain-packs-38978

    So in that one header does Crapman fraudulently advance the idea of “overwhelming evidence” for plain packs and that it [again] exposes the tobacco industry as a “liar”…… and this coming from Crapman, the liar extraordinaire with a “god complex”.

    It’s all so pitiful. But this is what’s been going on in universities/media for years and what forms the basis for government policy. Bear in mind that the government is committed to the word of these lying zealots because it will then get their full, raucous support for ever-increasing extortionate taxes on tobacco.

  50. Adelagado

    rich
    #1634690, posted on March 20, 2015 at 9:15 pm

    So if I pay a graphics designer in Romania to make me a logo, should he pay both Australian and Romanian tax?

    Of course he should not have to pay tax to the Australian ATO. That would be totally unreasonable. But he should pay tax in Romania and I should ‘perhaps’ pay GST to ‘import’ the logo if it cost more than say $1000.

    The supply of his ‘service’ should be treated exactly the same as if I had bought fancy shoes from him.

    The government doesn’t need to collect more taxes. It needs to shrink and stop spending money on stupid stuff.

    Well I totally agree with that, but thats a different issue.

  51. Some History

    Crapman’s articles on The [One-Sided] Conversation must be the quickest where the comments board is shut down. There must be a world record here. The comments board is open. The first few comments are typical fawning, “French kissy” type comments like “Oh, thank you so much for such a brilliant, brilliant article, Professor Chapman” or “Move over One Direction. You’re my idol, Professor Chapman”. Then as the critical comments start to come, WHAM BAM!, there it comes…… “Comments on this article closed”.

  52. Ms Dolittle

    A pack of 20 Longbeach

    There’s your problem right there, Longbeach have never been the passport to smoking pleasure, Fwit.

  53. Ms Dolittle

    A transaction that avoids GST is going to be a problem.

    So taxing fags harder, stronger and longer will surely make the culprits declare their gains? Honestly!

  54. rich

    I should ‘perhaps’ pay GST to ‘import’ the logo if it cost more than say $1000.

    Okay, so you want to classify it as a “good” that can be taxed.
    Remember because of tax inefficiency, we cannot have a true blanket on GST- all those little transactions would cost much more to enforce than they would bring in on revenue. That’s the reason for size. The ill-fated mining tax was inefficient- it’s actually possible to design a tax that costs more money to administer than it brings in in takings.
    So if I download an MP3, should the person who sells the MP3 to me pay some customs duty/tax?
    What if my neighbourhood downloads 12,000 MP3s, and each item is a piece of paperwork for the tax office? How many full time staff would the ATO have to employ to audit this enormous stream of information, and how much equipment/capital would be diverted both by the ATO and private sector to facilitate, report and enforce this? It’s madness. For your 48$k bill, do you expect Google to submit an itemised volume to the ATO describing each pageview that fit the part of your bill, on request?

    Not only that, if you wanted to “divide the earnings at the source”, you’d need a tax treaty with International governments to enforce it in the headquartered jurisdiction. Yet international governments are jealous and covetous- why should Ireland help classify tax revenue away from Ireland to other countries? It’s in the tax havens interests not to comply, and those are the countries that need to sign for it to work.

    Or you could to what the UK plans and just, “let’s take a guess, see how much they report and if it’s ballpark, then tax them that.” The stab in the dark approach lol. What could happen is the Google China answer- pull out of the country. Then no-one in Australia can enjoy outsourcing multinationally- that is what Australian customers want, and those Australians vote. I’m sure they’ll love it when prices go up!

    The Govt has to get money from somewhere unfortunately.

    The government has more than enough money already. The rort works by facilitating wealth transfer in exchange for votes. The solution to all problems seems to be “more government”… we are outsourcing our independence and infantilizing our citizens. Instead of promising to be everything to everyone, and spending other people’s money on other people, govt should stick to basic, core services and security concerns. It is trying to do way way too much. That’s why Google is being treated as some river of gold, and it won’t be. The river of gold is a myth- better to live within means.

    Well I totally agree with that, but thats a different issue.

    No it isn’t… it is THE issue, the root cause and reason that a hungry govt. is looking to implement a “google tax” in the first place.

  55. Adelagado

    #1634760, posted on March 20, 2015 at 10:27 pm

    A transaction that avoids GST is going to be a problem.

    So taxing fags harder, stronger and longer will surely make the culprits declare their gains? Honestly!

    My comments had nothing to do with fags. They were about Google.

  56. Pyrmonter

    rich – you’re confusing an ought with an is. If international tax law doesn’t, at present, impose liability that says nothing about whether it should: we used not to impose tax on capital gains; that wasn’t a very useful argument against the introduction of CGT (though the artfulness of Australian tax lawyers in contriving to convert revenue into capital might suggest that was both inevitable, and now irreversible).

    If the essence of the transaction is delivery of goods, and that occurs here, then I reckon they’re deriving income here.

  57. rich

    we used not to impose tax on capital gains; that wasn’t a very useful argument against the introduction of CGT

    How exactly would you impose “capital gains tax” on a corporation whose activities are in another country? So if a US Company sells a factory in China, and has business interests in Australia… can the ATO chase them for capital gains tax?
    That’s essentially what this “google tax” is asking for: to put an income tax on the source of production (servers serving data, factories making goods) rather than the point of consumption. AND if you wanted to try the pointof consumption, you run into the “inefficient small data” problem I described. It’s unworkable.

    The river of gold is a myth.

  58. Pyrmonter

    garnish their receipts; block payment if necessary. They’re hardly going to get online consumers to engage in the sort of sophisticated financial dealing necessary to evade effective payment bans.

  59. Pyrmonter

    and rich – I’m not suggesting some sort of river of gold is available – fwiw, my starting point in these discussions is the unremarkable proposition that taxes should be low, uniform and simple. On this point, I’m merely questioning whether some of the problems with the current system arise from antique administration rather than real problems. As an amateur outsider (CA, working in practice with fairly limited tax exposure) it does strike me that there is a remarkable conservatism to some tax principles.

  60. Adelagado

    “rich
    #1634766, posted on March 20, 2015 at 10:30 pm

    Okay, so you want to classify it as a “good” that can be taxed.”

    No, I’m suggesting that perhaps imported services need to have GST applied.

    For your 48$k bill, do you expect Google to submit an itemised volume to the ATO describing each pageview that fit the part of your bill, on request?

    It wouldn’t be hard for Google to add 10% GST to my monthly bill and send it to the ATO. I’m sure they could work out how to do it if they want to keep turning over a billion dollars in Australia. I don’t like the idea of paying more but I’ll cover it somehow or they will just have to bring their prices down. (Or maybe I would be exempt anyway as a small user). When I used to buy ads in the local paper, or bought printed matter I paid GST. Its not a radical idea.

    Not only that, if you wanted to “divide the earnings at the source”, you’d need a tax treaty with International governments

    Its not about taxing profit, its about collecting GST on local expenditure.

    The government has more than enough money already.

    Not for much longer. As I posted earlier, hundreds of tax paying Australian firms are closing because the advertising revenue is now going to Google. Think of every business in Australia that relied on income from the design, production, and printing or broadcast of advertising material. Thats everything from cheap flyers in your letterbox to newspapers, magazines and big budget TV commercials. Hundreds of companies and tens of thousands of jobs are disappearing because billions of dollars are flowing overseas to pay for online GoogleAds. All these businesses and people used to pay tax HERE.

    That’s why Google is being treated as some river of gold, and it won’t be. The river of gold is a myth- better to live within means.

    Its no myth. Google really is riding a river of gold. Did you see the link Sinc posted earlier? And thats just Australia.

    Look, I don’t have the answers, but I can see this is going to become a very big problem.

  61. Adelagado

    I’m suggesting that perhaps imported services need to have GST applied.

    Remember it is called a Goods and SERVICES Tax. Seems to me that theres a service happening here that aint being taxed.

  62. Gleambright

    @Indigo

    Shoot up to Indonesia, or even Thailand. Packs of quality ciggies available there for a dollar, I kid you not. It really brings home how ridiculous the prices are in Aussie.

  63. rich

    garnish their receipts; block payment if necessary. They’re hardly going to get online consumers to engage in the sort of sophisticated financial dealing necessary to evade effective payment bans.

    A government writing legislation to seize monies from a visiting corporation operating out of another country. As I said, it’s like trying to serve a tax bill to a Chinese factory. I’m sure that sends the signal that Australia is “open for business” /facepalm. Sovereign risk anyone?

    When I used to buy ads in the local paper, or bought printed matter I paid GST. Its not a radical idea.

    Here’s a clue. Because of reporting requirements, it’s much easier to compel a local business (in Australian govt juristiction) to report its earnings. ATO has no jurisdiction over the foreign offices without international legislation.
    I buy product from Games Workshop- if I buy from their UK arm, they don’t have to report earnings in Australia through the Australian office. The principle here is very clear, items sold by their foreign subsidiaries are not subject to Australia’s local taxes. There is an absurdity here that you guys fail to appreciate.

    When I used to buy ads in the local paper, or bought printed matter I paid GST. Its not a radical idea.

    It would be a radical idea if the newspaper was printed in Europe and you mail ordered it. False equivalence fallacy /facepalm

    Google really is riding a river of gold. Did you see the link Sinc posted earlier? And thats just Australia.

    Do you think there’ll be a river of gold for the ATO after the overhead of auditing 30 billion itemised and infinitely varying items? Or are you happy with the accuracy of the “stab in the dark” technique?

    I’m sure they could work out how to do it if they want to keep turning over a billion dollars in Australia. I don’t like the idea of paying more but I’ll cover it somehow or they will just have to bring their prices down

    You’re happy to pay more?? wow. I’d rather pay tax than receive welfare myself, but when I think of “stimulus”, paid parental leave, NBN, NDIS, Gonski… every other stupid thought bubble then it’s a man’s duty to pay as little tax as possible.
    You’ve been glamoured into the idea that we should be feeding the beast, when really we should starve it. Do you really think the “super profits” of the multinationals will be enough to sate its hunger, that it uses the wealth transfer mechanism to buy votes? Taxing google won’t slow the crocodile down- it will make it bigger and hungrier.
    An appeaser is one who feeds a crocodile, hoping it will eat him last. -Winston Churchill

  64. philj

    Started to watch this announcement on tv when I saw who was being interviewed re the result. Shadow Health Minister, forget her name, was rabbiting on when I suddenly remembered the last interview I saw her do. That was when she patiently explained to the adoring press that if you needed money to fund multi billion dollar health projects, you simply got it from consolidated revenue! Game, set and match.

  65. Pyrmonter

    rich – Australia applies its tax laws extra-territorially now. Australian tax residents are liable to disclose and bring to account foreign income in principle; in practice, there are fairly liberal exclusions for income derived from personal exertion. by affixing liabiltiy to a legal entity, we also permit australian residents to incorporate foreign tax resident subsidiaries. That is fairly practical; and indeed has come to seem almost natural. However, it isn’t the only way the system could be arranged. I’m not sure it shoudl be arranaged differently, but can easily see how it could.

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