I got sqizzors and I not allowed to run wif em… Pudding!
Shadow Treasurer Joe Hockey shocked the mainly conservative tax world when he told a gathering of accountants last week that consideration should be given to taxing trusts as companies.
A day later he backtracked and said that the Coalition had no plans to alter the tax treatment of trusts.
The taxation of trusts as companies is extremely controversial. Financial Services Minister and Assistant Treasurer Bill Shorten immediately attacked Hockey for creating tax uncertainty and for his backflip. Hockey denied the accusation.
This week, Shorten released draft legislation aimed at clarifying taxation around trusts.
Leaving aside the political argy bargy, the real question is: what are the merits of taxing trusts as companies?
As a very junior lawyer, I once worked on a case representing a restaurant owner, who had sold his business. The new owners complained that they could not make as much money as he had done.
When we looked into it, the reasons quickly became apparent. They had taken on their relatives as staff, fired the chef, and allowed grime to accumulate in the kitchen. They claimed that our client had misrepresented the true state of the restaurant when it was sold. But as the judge found, it was the new buyer’s shabby management that led to the losses.
Today, Joe Hockey is trying a similar trick. It’s been 101 days since the election, but rather than acting as the Treasurer of Australia, he’s frozen in opposition mode, looking for someone to blame.
Geeze a Paul Keating wannabe….
‘We have inherited from Labor gross debt’
Budget deficits could persist for a decade if no action is taken says Treasurer Joe Hockey in his Mid Year Economic and Fiscal Outlook statement.
Presumably Joe Hockey believes these Treasury figures, so here’s the simplified bottom line beyond the deficit hyperbole and predictable politics as he danced the MYEFO on the National Press Club stage:
GDP is growing by 2.5 per cent this year. The deficit is predicted to be 3 per cent of GDP.
Thus, if we didn’t have the big fat deficit, we’d be in recession with unemployment rising very sharply and many businesses going broke.
So there are reasons to be thankful for the deficit blowout the government tends to paint as purely evil.
If we didn’t have the big fat deficit, we’d be in recession with unemployment rising very sharply.
Not all the $47 billion deficit is stimulatory. The $8.8 billion Christmas present for the Reserve Bank is neutral, even though it represents more than half of the blowout since the August pre-election statement. The Treasurer admitted that the other half is from a softening economy – weaker receipts through lower taxes and automatic bigger spending. So all the debt isn’t the “fault” of the previous government. It just is.
TAXPAYER subsidies will not be paid to struggling companies that fail to fix their problems under a hardline edict from Joe Hockey aimed at forcing employers and unions to scrap workplace deals that push up costs. Rejecting aid for “lazy” companies, the Treasurer told The Australian that federal cash would not be used to shore up dividends or to continue poor industrial practices.
In a blunt warning to employees across the country, Mr Hockey said on Friday employers’ costs must fall to protect the economy in what was a volatile global market.
He backed cabinet colleague Industry Minister Ian Macfarlane, who in an interview with Fairfax Media pleaded with Toyota’s 2500 manufacturing workers to ”think about their futures” and accept pay cuts and the removal of ”archaic” conditions in their enterprise bargaining agreements.
”The union, the AMWU, is at war with Toyota, they are creating the conditions that make it extraordinarily difficult for Toyota to continue producing cars in Australia,” Mr Hockey said.
He said wage negotiations were a matter for individual employers and their employees, ”but the fact is we are all going have to do what we can to make Australia more competitive. Obviously we have to do more to reduce our cost base”.
Federal Treasurer Joe Hockey has accused the Manufacturing Workers Union of being at ”war” with Toyota and threatening the viability of Australia’s last car maker by blocking attempts to cut high costs.
But the federal opposition and the union movement pushed back, arguing the federal government was trying to shift blame for Holden’s decision to stop making cars from 2017 and make workers the scapegoat for the decision.
Treasurer Joe Hockey has set his own debt limit, quietly giving his department unprecedented permission to borrow up to half a trillion dollars to meet government commitments.
It comes despite Parliament voting to abolish the debt cap late last year, following a political stand-off with Labor and last-minute deal wit the Greens in the Senate.
The approval, granted in December and officially gazetted on January 22, means the Commonwealth Treasury can issue stock and securities to raise total liabilities to a value of $500 billion at any time until April, 2024.
“I direct that the maximum total face value of stock and securities that may be on issue is $500 billion,” Mr Hockey stipulated.
Initial confusion over the revelation was explained by Mr Hockey’s office as merely the Treasurer doing what he had originally sought to do which was give his department the scope to make necessary borrowings – but not beyond $500 billion.