By Sue Bolton
In January, a confidential Australian Taxation Office paper was released to the Australian under the Freedom of Information Act. In it, tax office officials lament that "control" of the tax system has been snatched by the big corporations, which cannot be trusted to pay their fair share of tax.
The document reveals the despair of officials as they confront the task of getting the corporate rich to pay tax.
One tactic of big corporations is to have lawyers hide or delay access to business information to prevent the tax office from determining if the correct amount of tax is being paid. When challenged in court, companies and high-income earners reply that the information is commercial-in-confidence and covered by legal professional privilege.
Such an option doesn't exist for an ordinary worker whose tax records are being audited.
When the Taxation Office took Kerry Packer's main private company, Consolidated Press Holdings, to court over unpaid tax, it lost the case. Consolidated Press Holdings made $614.53 million of profits in the last two years. On that profit, it should have paid $221.23 million in income tax, but it didn't pay a cent.
Not only do the big corporations control the current tax system (in the sense that they can withhold information from the tax office and avoid tax), but they also control the public debate about tax.
The very fact that the government is seeking to introduce a goods and services tax (GST)is reflects the big corporations' control of the political agenda.
GST campaign
After the 1993 federal election, when the GST was voted down along with the John Hewson-led Coalition parties, big business adopted a different tactic in its campaign for a GST.
Understanding that it had lost the battle for a GST because it was seen as unfair and inequitable, business developed a new strategy based on convincing welfare organisations of the need for a GST. With the peak welfare body, the Australian Council of Social Service, advocating a GST, albeit with some exemptions, big business turned its attention to winning over the public.
The Business Council for Taxation Reform (BCTR) was set up to maintain pressure on the government and welfare bodies and to fund a multimillion-dollar pro-GST advertising campaign before the last election. Another such advertising campaign is likely to be launched soon.
Big business is doing its utmost to keep up the pressure on the government and public opinion through a continual propaganda campaign in the media and special "behind closed door" meetings with government ministers.
Threats have been made that companies will withdraw their capital and move overseas unless the government implements the GST and a program of cuts to business taxes.
The BCTR and the government sought to ram the GST through without a genuine public debate. The federal election was called before many of the details of the proposed tax were publicly available — such as how education, health and charity services would be affected.
Deception
Since the Senate inquiry into the GST was launched, it has been revealed that the government and the Treasury withheld information about the GST prior to the election. The inquiry has exposed Treasury papers, kept secret during the election campaign, which show that:
- The GST would result in price increases up to 30% higher than the government's official estimates for pensioners, the unemployed and low-income earners.
- The increase in inflation will be higher than the government's official estimate of 1.9% across the economy. Treasury officials have conceded that the GST is expected to increase inflation by 3.1% in its first year of operation.
- No new jobs will be created by the government's tax package, despite claims by Prime Minister John Howard and treasurer Peter Costello that the GST is a "$10.5 billion job creation fund". Treasury officials admitted to the Senate inquiry that the tax package assumes there will be no employment gains in any sector of the economy.
- Inflation would be lower with food out of the GST.
- The Treasury has produced a detailed analysis on the impact of the GST on the economy despite previously telling a Senate committee that a full analysis was impossible and a waste of taxpayers' money.
Freedom of Information Act searches have revealed many Treasury documents regarding the impact of the GST, which have not been made public.
The Senate inquiry has also revealed that welfare recipients will not receive a 4% boost to their payments (as compensation for the introduction of the GST) in addition to the normal six-monthly adjustment. This is contrary to statements by government ministers during the election campaign.
Submissions to the inquiry from economists who have modelled the impact of a GST have questioned the assumptions underlying the Treasury's own modelling.
Some of the submissions indicate that the GST will not increase economic growth, will cause the loss of 60,000-100,000 jobs, will result in higher inflation than predicted by Treasury and will result in people on low incomes being worse off and needing more compensation.
Business taxation
Now that the second discussion paper has been released by the Review of Business Taxation (RBT), the government and the big business-controlled media will intensify their pressure and deception. They want to force the GST through the Senate before the negative consequences of a GST become too apparent, and before people react against the proposed cuts to business taxes.
If the GST and cuts to business taxes are linked publicly, it will become obvious that the GST's sole purpose is to transfer the tax burden from the rich minority to the majority of the population.
The release of the second RBT discussion paper reveals that the review has nothing to do with eliminating tax evasion, but everything to do with cutting business taxes. The key proposals in the paper are to cut the corporate tax rate to 30% and to cap the capital gains tax at 30%.
By refusing to draw the link between the GST and the cuts to business taxation, the Democrats and the Labor Party are doing nothing to expose the real agenda of big business and the government.
It is still possible that the GST legislation could be blocked in the Senate because of the Democrats and Senator Brian Harradine's insistence that food should not be included in the GST.
However, without a public campaign outside parliament, it is likely that the Democrats and Harradine will do a deal with the government to let the GST through, well before the cuts to business taxes come before parliament.
Early signs aren't promising: the Democrats' tax spokesperson, Senator Andrew Murray, says that the definition of food is still to be decided by the party. He said, "Our mind is open on the definition front" but added that there was an "inclination to a wider definition".
It has been reported in the press that the Democrats are opposed only to a GST on supermarket and fresh food, but are prepared to allow a GST on other food.
Even if the Democrats are successful in blocking the GST on some food items, that will not stop a further transfer of the tax burden from the rich to working people.
The fact that the government had to cover up and lie about its own research into the GST during the election campaign demonstrates that it is possible to implement the big business tax agenda only with massive public deception.