February 24, 2010 | Ronda Jambe

Zero taxation and lots of representation

Adele Ferguson wrote in the SMH (Feb 17) that at least 40% of the biggest companies in Australia pay no tax.

That must mean they aren’t profitable, since profits gets taxed, don’t they?

But the tax man is going after them, which makes you wonder how long this has been the case. It can’t be for lack of staff, as it can reasonably be assumed the ATO is no more (and no less) bloated than other departments.

Has corporate tax shrunk as a proportion of total tax? Or are retiring baby boomers living off the rest of the country, as implied about the UK in a recent book review in the Economist?

There are no signs that the corporate sector is underrepresented in government deliberations, if you consider how often their peak bodies appear on TV compared with, say, ACOSS or the Brotherhood of St Lawrence.

A thread to be followed, for sure, in these days of government deficits.

This may be my last blog for a bit, as I am off to Rajasthan to see the sights of Northern India. I wonder how much tax the average Indian pays?

Posted by Ronda Jambe at 12:48 am | Comments (3) |


  1. Oh come on Rhonda. You say: as it can reasonably be assumed the ATO is no more (and no less) bloated than other departments.

    What evidence is there for this? As I have written elsewhere, the ATO brings in $100 for every dollar spent on it. More trained ATO staff would bring in more money.

    The fact that 40% of big business don’t pay tax isn’t solely because the Government underfunds the ATO. It has to do with other issues too like the GFC and the carry forward of losses, increasing use of debt rather than equity, and transfer pricing (where I think the ATO maybe has dropped the ball.)

    But you have to remember big business has huge resources and great tax advisors to tax ‘plan’ and then to battle any audit/investigation etc by the ATO.

    Declaration of interest: I used to be a senior officer in the ATO.

    Comment by John Passant — February 27, 2010 @ 10:10 am

  2. The big Corportates don’t have to pay much tax since they rule our Govts.We live in an Oligarchy in which the powerful elites hold our Govts hostage.The corporate media can make or break a party and they control both the major parties.

    More resources for the ATO is only a partial solution.We need a third party that upholds true democracy.

    Comment by Arjay — February 28, 2010 @ 10:19 am

  3. John, sorry I haven’t replied sooner, just saw your comment. I reckong the tax laws allow the loopholes. Of course there are many dedicated and competent staff at the ATO, and probably they could do better with existing staff, but policy settings that go soft on corporate obligations let companies off the hook. I would say close the loopholes and enforce the law.

    Comment by Ronda Jambe — April 15, 2010 @ 2:09 am

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