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Issue #1889      October 9, 2019

Editorial

Handing over to the corporations

The economic rationalists are doing more than just trying to remove barriers to transnational operations, or reduce the size of government. When they talk about “handing everything over to the markets” they are talking about handing over government policy making and political power and all public enterprises to the naked dictatorship of the big corporations whether national or foreign enterprises.

The Australian government never hesitates in preaching the values of Western democracy and how Australia is an outstanding example. We regularly elect governments in “free and fair” elections and our Westminster-style parliamentary system is relatively open to scrutiny.

Australia’s parliamentary system has many shortcomings, but at least legislation was usually public before it was passed and trade unions, consumer, environmental, health, education, and other groups and individuals had an opportunity to express their views and to lobby and campaign for changes. This is now not the case.

Billions are handed over in corporate welfare.

The federal government pays a fossil fuel subsidy of more than $10 billion per annum. The private health insurance companies receive a direct subsidy of more than $6 billion per annum in the form of the PHI (private health insurance) rebate (30-40 percent) of cost of premiums. This indirectly subsidises the private hospitals and other private health services.

The only corporate subsidies being axed are the ones that seek to address climate change.

There is a tax emergency – which needs urgent addressing before the whole taxation base collapses.

Workers are not only carrying an increased income tax burden, but paying the GST which has been rising as a proportion of national income. On top of that, the government is using the short-fall in taxation as an excuse for its austerity measures and continuing to cut the company tax rate.

Instead of spending cuts – which have such devastating consequences for the most vulnerable people – the need is for focus on progressive reforms to the tax system so that the corporate sector pay a larger share. This would overnight result in a large budget surplus, and not a shortage of funds for people’s needs.

These reforms should include repeal of the fossil fuel rebate, ending the PHI rebate, an increase in company tax rates and marginal rates on higher incomes. It is time mining companies funded their own infrastructure. Huge savings could be made by slashing the military budget which is headed towards $1 trillion.

The personal income tax system, despite its shortcomings, is more progressive, with those on higher incomes paying a higher rate in the dollar once their income reaches certain thresholds. The GST is an unfair tax that shifts the tax burden onto those least able to pay and lets the corporate sector completely off the hook. Not surprisingly big business is keen to slash company tax rates and increase the GST.

The GST should be abolished. Company tax and the marginal rates on higher incomes should be increased. At the same time billions could be raised to meet social needs by slashing corporate welfare and closing the loopholes that allow highly profitable transnational corporations to pay peanuts or no tax at all. There is absolutely no economic justification for balancing budgets and swelling corporate profits at the expense of the people.

As professor Pietro Guj of the University of Western Australia, who has been an advisor to that state’s government, put it: “A company has the right to conduct business wherever it chooses.” Big business knows no borders, recognises no sovereignty.

It was in 2005 that the Singapore government registered a new company called BHP Billiton AG Singapore Branch. It was given a special Pioneer Service Company status, which meant it would pay no income tax until 2020. Its Singapore tax-free profit is then sent to Switzerland. BHP Switzerland then pays 2.5 percent tax. The remaining profit is then paid as dividends to BHP Netherlands and considered tax free. This ruse is called duel-listed companies which function as two separate companies subject to two different tax authorities.

Next article – A brief history of the Darwin Workers’ Club

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