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Dr Dennis Jensen MP
Federal Member for Tangney
Mr Speaker, I rise to discuss some of the issues arising from the International Tax Agreements Amendment Bill, 2011.
This bill, while seemingly innocuous and straightforward touches on some broader issues regarding income taxation in Australia; I would like to expand on these issues.
This bill broadly solidifies the Agreement between Australia and a number of other mutual nations to avoid double taxation.
This is a step in the right direction; after all, lower tax is always the preferred scenario.
I encourage this government to continue to minimise taxation, where at all possible.
This bill is also designed to crack down on tax evasion with respect to taxes on income, the aim being to ensure the government continues to collect income tax earned overseas, at all costs.
Reform elicited by this Bill will move some small way to ensure constituents such as Mr Parishan from my Tangney electorate are no longer unfairly targeted through double taxation, but sadly... only in a handful of nations.
Mr Parishan is on the verge of selling his family home to pay a $250 0000 tax bill. This retrospective bill is taxation of income earned during 2 of the 5 years he worked in both Qatar and Dubai as a structural engineer.
While Mr Parishan paid various money, duty, tariff, import and export taxes, the fact that his income was not directly taxed in these United Arab Emirates nations means Australian Treasury is within their right… to take my constituent to the cleaners.
Again, While income earned by Mr Parishan in Dubai and Qatar is not subject to an income tax, other receipts including money, duty, tariff, import and export taxes paid in addition to the mere cost of living burden in these countries must surely in any just taxation assessment, be taken in to consideration when making any rulings on whether income has been fairly taxed overseas.
A selective focus by the Australian Treasury on income tax, while unfair, is also a lost opportunity for our Federal Government coffers.
Tax receipts from other streams of income earned overseas are largely ignored or only minimally taxed.
A focus on this single income tax model narrows federal government receipts… and pressures to meet mounting deficits forces drastic and over zealous actions when chasing taxes the Government believes they are owed.
This can only be to the determent of our citizens.
We do not have an Agreement between Australia and either Qatar of Dubai for the avoidance of double taxation and the prevention of fiscal evasion:
In respect of withholding tax, on income and in respect of administrative provisions.
At present, the general proposition under Australian law is that treaties which Australia has joined are not directly and automatically incorporated into Australian law.
And while Amendments contained in this Bill will give Australia's tax treaties the force of law through streamlined arrangements… the fact that we are not reciprocal signatories with countries of significant Australian expatriate investment and development is of most concern.
…Why do countries with no income tax but have other excises and tariffs elicit attack by the Australian tax department.
Yet more importantly, let’s look at whether it is even necessary to have an income tax at current index levels… or an income tax at all?
Can we look at a greater focus on consumption taxes and the like to improve efficiencies and drive down bureaucratic waste?
I believe the income tax and the money it enumerates to the executive is the facilitator of Government Growth and waste... including those monies earned overseas.
The treasury will tell us an income tax is imperative… after all… it addresses what inevitably would be a shrinking revenue base. However this is what the treasury is tasked to do…it’s their job to ensure Government spending can be met by reciprocal tax receipts.
This relationship is fundamentally flawed.
It places the onus on the government of the day to constantly keep a check on its budget growth.
This trust we have placed in the Federal Government to self regulate its spending has been betrayed, with both parties massively increasing the size of the Federal Government over successive governments.
And real issues arise from this growth in the Federal Government, most importantly the issues of economic and social freedoms.
The federal government has expanded far beyond its proper constitutional limits, regulating virtually every aspect of our lives. There is no real argument about whether we live in an over regulated society, the fact is readily accepted and backed up by numerous studies.
Big government and numerous departments and bureaucracies take billions of dollars out of the legitimate private economy and penalises productive behaviour, with most Australians giving a large chunk of their income and other monies to the federal government.
The ridiculous complexity of our tax laws makes tax time a nightmare for both individuals and businesses.
These factors are made worse by our electoral cycle.
Come election time Australians are given the false choice between bigger and bigger government, between which party can promise and redistribute wealth to the greater extent, while maintaining a façade of fiscal responsibility.
These are two choices from the same side of the coin.
The Australian people need to grasp the concept that the more government spends, the more freedom they lose, both personal and economic.
All things considered, Australians should be dismayed by the income tax mess and the tragic loss of liberty and Freedom which has ensued.
Yes, changes to income taxation would force the Federal Government to be massively reduced, but that’s a good thing.
It would force a debate on spending levels, again this is a good thing, but we ought not to be debating whether we can save a million here or million there, but whether whole departments, agencies, and programs funded by the budget should exist at all.
Little cuts here and there don’t address the big picture problem.
To get to this small government place we need to get away from the idea that big government makes our lives better, that government can do anything other than redistribute and then waste economic resources from the productive private sector and citizenry.
Examples of government over reach are everywhere.
The hot button issue at the moment is cost of living pressures.
It’s a problem Government cannot make better, but can make infinitely worse by meddling in the affairs of private citizens.
Every attempt at providing handouts and stimulus merely inflates the economy and makes life harder for everyone.
So why not try the opposite, why not less government, less tax.
If the average Australian was to look at how much they pay in tax, now cut that number in half, this would go along way to solving the cost of living pressures and inflation in the economy.
… the answer is less not more
US Congressman Ron Paul said it best:
“I believe Income taxes are responsible for the transformation of the federal government from one of limited powers into a vast leviathan whose tentacles reach into almost every aspect of American life.”
In our case, all that needs to change in that statement is to substitute Australian for American.
Money, duty, tariff, import and export taxes must also be considered when making judgement on taxation owed to the government to ensure double taxation does occur even under Amendments contained in this Bill.
Most tax discussions are based around simplification for taxpayers and ensuring a solid revenue base for the Government.
But we also need to discuss how much of our private citizens money should be entrusted to a government and for what purposes.
This inevitably will require reviewing the way taxes are collected.
While Amendments contained in this Bill will give Australia's tax treaties the force of law through streamlined arrangements, a discussion of the fact that Australia is not reciprocal signatories, with countries of significant Australian expatriate investment and development is an issue that must be placed on the table.
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