Australia's weak leadership

[onetrack]

It appears Jerry isn't so hard done by, on the Tim-Tams front, anyway - he gets them cheaper than us! The downside is, the manufacturers shrink the packet size for the U.K.!

 

https://www.theguardian.com/australia-news/2024/oct/05/aussie-classics-vegemite-and-tim-tams-cheaper-in-uk-supermarkets-than-australia

[Jerry_Atrick]

Oh my.. maybe I had better stay put

 

And they're on special at the moment..

 

Or maybe I'll export them back to aus?

[Marty_d]

On 08/10/2024 at 12:15 AM, Jerry_Atrick said:

Those Tim Tams neve make it to the border..

 

The government is now asking why Tim Tams are more expensive here than in the UK.  

(the link is for the daily blog so you may have to scroll down to see the article).

 

https://www.theguardian.com/australia-news/live/2024/oct/11/australia-news-live-house-prices-scam-prevention-laws-anthony-albanese-peter-dutton-labor-coalition?CMP=share_btn_url&page=with%3Ablock-670873d28f08c777d3008a59#block-670873d28f08c777d3008a59

 

[onetrack]

The size of the U.K. market would mean the Tim-Tam distributors and retailers there, would be able to negotiate a better price for Tim-Tams, based on a substantially-increased volume of Tim-Tams.

The Australian sales levels are probably less than a quarter of U.K. sales levels. And despite the freight cost to the U.K. that would initially appear to be sizeable, containerised transport via ships is relatively cheap, especially when a client is a sizeable, regular, repeat client.

The cost of transport within Australia is quite high, because we freight goods on trucks, and despite using road trains, the cost per item is high, due to the fact that trucking is actually a high cost freight method, as compared to ocean shipping.

I got freight quotes recently to move a 600kg generator set from NSW to W.A., and the charges were vastly more than I expected, and one of the quotes had a fuel surcharge of 28% added to it!! The quotes ranged from around $2500 to around $5000, and it's a compact heavy gen set, so ideal for the trucking companies.

[spacesailor]

Too much taxation in Australia. 

I saw  the " registration cert " for a Ute.

more tax than registration fee . I can't see how a tax percentage of that fee could 

Be higher than the fee ! .

spacesailor

[facthunter]

People  expect the Gov't to do everything for them and then pay no tax. THAT doesn't compute.  Nev

[Jerry_Atrick]

Well, it does compute for some.. mainly large corprorates and multinationals.

 

I haven't done the maths, but, intuitively, the easiest thing to do would be to institute a revenue tax, and remove all other taxes. Revenue tax would catch all monies received, whether by real people or legal people (i.e. companies/corporates and the like). The only exemptions would be government departments and statutory authorities. I am guessing a flat 7 - 10% would do it, or maybe progressive depending on the maths, but the idea would be to minimise it as much as possible. That would mean a lot more money in the pockets of the vast majority of the population, most of which would go straight back into the economy. It captures transfer pricing tax dodges.

 

In addition, the government can request the money on a monthly or quarterly basis, as it is off revenue, and not waiting for the year end accounting to be done. .So, helps government cash flow.

 

The minus side is that it could stifle new start ups, but I think this would be a negligible impact as they would have to price to cover the cost. And if it is progressive, it could help them, anyway.

 

The other consideration is the state taxes, but tweaks could even mean the elimination of state taxes with a guaranteed slice of the federal pie from a revenue tax.

 

The flip side is, of course, what the government does with our taxes. The structure and conditions of the public services means they are never going to attract the best, though when I worked in the public service in Vic, there were some bright sparks - eventually lured to the private sector. You have to expect some what one would perceive as dumb ideas.. The problem is when you have governments that are profligate - AUKUS being one concern...  Need rules in place to ensure that the investments are well directed.

Edited October 11 by Jerry_Atrick

[spacesailor]

" I am guessing 7%-10% " .

The poorest of people pay 10 % gst tax . ( on food ).

so how about a bit more here , then perhaps we may drop that gst to 7% .

spacesailor

[Jerry_Atrick]

Is GST payable on food? That is ridiculous.. No VAT on food (apart from restaurants and the like) here. As I said, a revenue tax should mean elimiation of all other taxes.

 

(Revneue includes pay as well as revenue).

 

[Jerry_Atrick]

6 hours ago, Marty_d said:

The government is now asking why Tim Tams are more expensive here than in the UK.  

(the link is for the daily blog so you may have to scroll down to see the article).

 

https://www.theguardian.com/australia-news/live/2024/oct/11/australia-news-live-house-prices-scam-prevention-laws-anthony-albanese-peter-dutton-labor-coalition?CMP=share_btn_url&page=with%3Ablock-670873d28f08c777d3008a59#block-670873d28f08c777d3008a59

 

Australia is a margin based cash cow for many companies. Both Holden and Ford sold their cars cheaper in foreign markets that Australia. I can get Aussie wine here cheaper than in Australia (though some of that may be the wine equalisation tax, but even so, it is made in Australia and has to be transported here so as not to deteriorate, and they still do it cheaper hee - for virtually everything from table wines to premiums..)

 

A friend of mine in Aus met a bloke who was establoishing Hershey's chocolate in Australia. Hershey's is probably, IMHO, the worst chocolate I have tasted. My mate asked this fella why would they try and establish a presence in a small market already dominated by their competitors. The response was Australians are willing to pay well over the odds for their stuff, so even if they get a small share of the market, they can still make money.

[pmccarthy]

Mars bars in Asia are made in Ballarat. Macpherson Robertson was one of the wealthiest men in Australia, funded air races. We pull our weight in chocolate.

[willedoo]

1 hour ago, Jerry_Atrick said:

Australia is a margin based cash cow for many companies. Both Holden and Ford sold their cars cheaper in foreign markets that Australia. I can get Aussie wine here cheaper than in Australia (though some of that may be the wine equalisation tax, but even so, it is made in Australia and has to be transported here so as not to deteriorate, and they still do it cheaper hee - for virtually everything from table wines to premiums..)

 

A friend of mine in Aus met a bloke who was establoishing Hershey's chocolate in Australia. Hershey's is probably, IMHO, the worst chocolate I have tasted. My mate asked this fella why would they try and establish a presence in a small market already dominated by their competitors. The response was Australians are willing to pay well over the odds for their stuff, so even if they get a small share of the market, they can still make money.

I've heard that story a few years back about American companies exporting into Australian markets. They see Australia as the cream on top and charge higher prices here than they do anywhere else in the world. The tale I heard (on the radio I think it was) was that it was a bit of a standing joke among American traders.

[old man emu]

2 hours ago, Jerry_Atrick said:

Is GST payable on food?

Remember Hewson's birthday cake?

 

Willesee: "If I buy a birthday cake from a cake shop and GST is in place, do I pay more or less for that birthday cake?"

Hewson: "...If it is a cake shop, a cake from a cake shop that has sales tax, and it's decorated and has candles as you say, that attracts sales tax, then of course we scrap the sales tax, before the GST is..."

Willesee: "OK — it's just an example. If the answer to a birthday cake is so complex — you do have a problem with the overall GST?"

 

Basically, simple foods do not attract GST - meat, milk and vegies. It is only when those basic ingredients have been used to make a food product that the GST is applied. I'm just looking at my docket from the supermarket today. These things attracted GST: crushed mixed nut (for ice cream and chocolate sauce desert assembled at home), a block of chocolate and cinnamon donuts. Oddly enough, devon, beef sausages, chicken burgers, diced bacon and hamburger rolls didn't attract GST. although their production did involved what could be called a "service", in the form of labour and machine inputs.

[onetrack]

The GST was touted by Little Johnny as a simpler and fairer tax. It's not, and the complexities of GST calculations now far exceed the original taxes it replaced. The GST taxed a lot of "black money" and drug money that formerly escaped taxes, because eventually, "black money" and drug money has to be invested in areas where taxes are applied.

One of the things that got up my nose is that the Govt gained a huge windfall in GST from the sale of used goods that were formerly untaxed.

 

Jerry, I trust you're not actually saying that millionaires and billionaires need to pay more tax?? God forbid, Gina Rinehart is struggling on her $37B worth of assets, give her a break!

[facthunter]

The GST is  a BLUNT Instrument. You could make a good case for reverting to tax at the wholesale level. . Why tax people who are already below the POVERTY line? (Unless you don't give a stuff for them, like Sco Mo and Hockey).   Nev

[old man emu]

1 hour ago, facthunter said:

You could make a good case for reverting to tax at the wholesale level.

That doesn't relieve the end consumer from making the tax payment. A wholesale tax becomes one of the costs in the price of an object. The wholesaler would merely tally all those costs and that would be the cost price to the purchaser, plus the wholesaler's markup.

 

Let's face it. There is no escaping tax on consumer items. The only way to attempt an escape is for the end consumer not to buy taxed items. But then, what is the point of earning money if not to obtain more than the essentials for survival?

[facthunter]

Cuts the Paperwork and easy to modify. With GST anyone doing business is a tax collector. Nev

[Marty_d]

Still think Nomadpete's idea of a transaction tax is the best idea.

[old man emu]

1 hour ago, Marty_d said:

 transaction tax 

Playse explaynn.

[Jerry_Atrick]

1 hour ago, Marty_d said:

Still think Nomadpete's idea of a transaction tax is the best idea.

 

Depends on how it is implemented. If it is a flat fee per transaction or percentage of transaction, then here is the likely outcomes:

• Financial Markets (trading, securuties financing, etc). Transactions would be netted to as fewer transactions as possible. If I am a retail trader, I will likely pay full whack, but a professional trader will execute many times and net to as few a number of transactions as possible, and to have the lowest transfer of money as possible. This already happens anywas as settling large numbers of individual trades is expensive, anyway. Also, think of a treasury function, whic is about balancing outgoings v ingoings and making sure there is enough cash to operate the business. They tend to have very small net transactions at the end of he day. The markets could easily tructure to minimise a transaction tax.
• Investment funds and asset managers - agains, they will structure their trading activitiy to minimise the number of transactions and the net amounts to transfer..

 

Other transactions in the economy are laready taxed as stamp duty or GST.

 

If the transaction tax is based on executions as opposed to transactions, then it can become quite troublesome. Say for example, you placed an order to buy 10,000 shares in company x on the ASX. Say you wanted an algo to run to get you below volume weighted average price (VWAP) for the day.. Granted not many electronic trading platforms will provide this serviec, but some do. The algo starts buying and then selling shares anbd buying and selling based on price deviations to get you your 10,000 shares at an average price that is better than VWAP for the day. They may have executed multiple thousanrds of trades and gross transaction value in the multiples of times more than you actually pay for your shares, especially if there is a lot of market volatility. Suddenly, your transaction taz bill is comping close to your actual sale value. Not sure that is a great way to do it, either.

 

A revenue tax is simple.. How much in revenue did I take? It's sort of binary in most cases. So, while someone invested, say $1m in shares through my brokerage, my fee is, say, 0,1% of that investment, regardless of how many executions were made to fulfill the client order.

 

Not only that, but when most people think of financial markets and transaction tazes, they are thinking stock exchange and equivalents for what are termed cash instruments. These are shares, bonds, exchange traded futures/optons, and the like, where you acquire the asset and the rights to the return of the asset in an agreed trade, usually on a trading venue. However, the largest value of the finanical markets is usually held in what are termed over the counter derivatives. These are usually bilateral, but can be traded, again, over the counter. There are many types, but most are about swapping cash flows (which is why they are called swaps). And, with the expceton of payment of margin (collateral) to, these days, normally a central clearing counterparty, there is no exchange of money on the day of the transaction. Thre is a notional value, and this can be hindreds of millions and even billions of dollars. But that is just a value that determines the cash payments based on the rates set by the swap. I won't go into too much detail, but a simple interest rate swap will have one countperparty pay a fixed rate of interest on the notional (say $100M), say every quarter, while the outher counterparty will pay a floating rate of interest, say the RBA rate on the last day of the quarter + 1.25% on the same notional ($100M). Say the fixed rate the first counterparty is paying is 10%.. So every quarter, the first counterparty will "pay" $2.5m ($10m annual interest payment/ 4 quarters), and the second counterparty will pay 1/4 * ($100M*(RBA Base Rate + 1.25)). This means the second counterparty can effectviely turn a floating rate $100M loan into a 10% fixed rate loan for risk management and treasury management purposes. The reality is that only one counterparty pays - the one who is owed more than the other, and the net amount is pad. So, If the RBA rate is, say, 3.5%, the first counterpary will pay because they will have to cough up $2.5M as opposed to $1.25M for the second counterparty. But, only the net is paid, so the first counterparty will cough up the difference - $2.5m - $1.25M = $1.25M to be paid to the second counterparty. That $1.25M is gross revenue to the second counterparty.

 

These loans don't tend to go for short periods; Swaps range from 7 days to 50+ years.. The point is, when using a transaction tax, you will get one hit of tax at the beginning of the transaction. But, using a revenue tax, you will get many hits, as there are payments in the swap. In the above example, say itwas a 10 year swap and the economics didn't change (i.e. RBA didn't change its rate) for the period, that would be 40 quarters of tax on $1.25M as a simple tax on a single point of the transaction. The value of derivatives transactions dwarves the value of cash instruments transactions.

 

 

And, I haven't tuched securitised financing transactions, which are sort of derivatives in their own right.

 

A little while ago now, but here is the outstanding value of the derivatives market in June 2023:  https://www.isda.org/a/5ihgE/Key-Trends-in-the-Size-and-Composition-of-OTC-Derivatives-Markets-in-the-First-Half-of-2023.pdf

 

[Jerry_Atrick]

21 hours ago, old man emu said:

Remember Hewson's birthday cake?

 

Willesee: "If I buy a birthday cake from a cake shop and GST is in place, do I pay more or less for that birthday cake?"

Hewson: "...If it is a cake shop, a cake from a cake shop that has sales tax, and it's decorated and has candles as you say, that attracts sales tax, then of course we scrap the sales tax, before the GST is..."

Willesee: "OK — it's just an example. If the answer to a birthday cake is so complex — you do have a problem with the overall GST?"

 

Basically, simple foods do not attract GST - meat, milk and vegies. It is only when those basic ingredients have been used to make a food product that the GST is applied. I'm just looking at my docket from the supermarket today. These things attracted GST: crushed mixed nut (for ice cream and chocolate sauce desert assembled at home), a block of chocolate and cinnamon donuts. Oddly enough, devon, beef sausages, chicken burgers, diced bacon and hamburger rolls didn't attract GST. although their production did involved what could be called a "service", in the form of labour and machine inputs.

 

8 hours ago, onetrack said:

The GST was touted by Little Johnny as a simpler and fairer tax. It's not, and the complexities of GST calculations now far exceed the original taxes it replaced. The GST taxed a lot of "black money" and drug money that formerly escaped taxes, because eventually, "black money" and drug money has to be invested in areas where taxes are applied.

One of the things that got up my nose is that the Govt gained a huge windfall in GST from the sale of used goods that were formerly untaxed.

 

Jerry, I trust you're not actually saying that millionaires and billionaires need to pay more tax?? God forbid, Gina Rinehart is struggling on her $37B worth of assets, give her a break!

Pluck me dead.. the Aussie government has never really looked after Aussies, has it?

 

Over here, virtually all food stuff purchased from the supermarket are VAT free. I am not even sure alcohol is tVAT taxed, but I think it is. Books are also VAT free. I think things like stationery attract a lower rate of VAT (8%) as does energy. Everything else is more or less 20%, which is poop, too. But, it is probably one of the reasons Tim Tams are cheaper here.

 

6 hours ago, facthunter said:

Cuts the Paperwork and easy to modify. With GST anyone doing business is a tax collector. Nev

Yes, businesses are the government's tax collector here, too. However, I amm very wary of tradies I use. They bill you and collect the VAT,but don't pay it, we become liable. I had a debate over this with a HMRC employee  - they appoint the tax collectors but we are responsible for the tax collector not doing their job properly? Answer was they don't care and avoding tax is seen as a worse crome than murder.

[spacesailor]

I have witnessed three small businesses.  Shut down by that taxman .

They Were solvent , untill the Tax-man put locks on their door .

Not even a 24 hour delay was tolerated,  in their ' tax payment '.

spacesailor

[Jerry_Atrick]

When people say they business has shut down because of the taxman, I am often wary. I have had times when I ran a business when the tax bill came, I had to cut right back on things, but that was because I did not keep the cash aside to pay the tax on the profits I made; I was going to find it from future revenue. Problem is, the revenue thinned right at the wrong time. I learned tha lessonn. That is not the tax man's fault; that is mine. When one runs a business, they have a lot more lattitude with cash flow management than a PAYG/PAYE earner.

[onetrack]

I've never seen anyone shut down by the ATO at 24 hrs notice unless major criminality was involved. The ATO prefers to have a negotiated settlement, unless it's obvious the tax defaulter is intent on major rorting, and continuing tax avoidance.

[facthunter]

I think they have FIRST claim on the Assets and can force a bankruptcy. Trading while insolvent is a criminal offence and that can be hard to decide "grey area". .   Nev