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the government is reported (crikey, item 12 august 18) to be in the process of scrapping capital gains tax for foreign buyers of non-real estate australian assets.
i have been following troppo for a while and recognise the knowledge and expertise contributed on a wide range of issues. maybe someone can answer a few questions:
1. do you know the rationale for the government’s introduction of this legislation?
2. does the legislation effectively mean that a foreign entity which debt funds a purchase of an australian enterprise might then pay no tax on profits (because the money goes to service debt), sack staff to increase net revenue and the enterprise’s value, then sell the asset for a gain of perhaps billions of dollars without paying capital gains tax?
3. there’s no doubt a monetary gain by individual shareholders in the enterprise, but what are the benefits(costs) to australia as a whole of facilitating this process by giving foreign buyers a tax advantage over australian entities?
On the topic of Vietnam, wars and related matters, people might like to be reminded that we had four conscription debates last century.
http://badanalysis.com/catallaxy/?p=1906
On conscientious objection, at the time of Vietnam the law was loaded against secular humanists and people who were not pacifists. Selective objection was not permitted. Years later there was a Senate review of the matter and sensible reforms ensued. I posted on that a couple of years ago and will find the post later in the day.
I just finished reading a biography of Curtin who was one of the few working class pollies whose opposition to militarism didn’t melt away in the WWI at the first whiff of grapeshot. This was transposed into vigorous opposition to conscription. Of course later in his life ended up supporting the extension of conscription even outside Australia in WWII – as Prime Minister. That reflected both the changed circumstances, but also a fairly substantial shift towards the centre of the political spectrum. Curtin was desparate to avoid a further split of the labour party.
You mention that there have been four conscription debates last century. We also had (at least) four splits of the labour party.
Hughes walks out
Lyons walks out
Lang splits
and The Split of the 50s ushering in the DLP.
Conscription in WWI was blocked by the Labor reps in the Federal Senate, after Billy Hughes had the numbers in the lower house through a combination of the non-Labor opposition and the 15 or 16 Labor members who supported him and lwalked out of the party with him.
The referendums of 1916 and 1917 were supposed to force the hand of the Senate recalcitrants by the weight of public opinion. It was assumed by everyone, including Les Darcy, that the Yes (for conscription) vote would get up and conscription would ensue.
But what if the yes vote did get up? What obligation did members of the Senate have to follow public opinion?
In the ALP caucus the vote for the referendum only got up by about two votes, after two days of debate.
A joint sitting of both houses would have carried the day for conscription, how could that have been triggered?
CONSCIENTIOUS OBJECTION
As promised, a report on the law reform after the Vietnam War to allow for selective conscientious objection and other options.
http://badanalysis.com/catallaxy/?p=760
Testing
Hey, have I been resurrected? Perhaps Homer has been interceding on my behalf. Or even Jason Soon. No perhaps not the latter.
No one interceded. Welcome back W.
Malcolm,
I don’t know the issues but will keep an eye out for them and comment if I think I have anything to offer. (By the way, sorry your comment didn’t appear in this thread until now (when it pops up as the first comment). For reasons that remain a mystery to me, your comment was regarded as suspiciously like spam by our software.
On a completely different subject, I see that that the American Congressional Budget Office has just done the same kind of exercise (pdf) as we have in preparing a study of comparative corporate tax rates.
Malcolm,
I’ve been to the link provided by crikey and it all looks pretty complicated. The Minter Ellison brief speaks of the measure narrowing the tax base on the one hand but broadening it on the other. So it’s difficult to offer comments. I would say that I’m a bit suspicious of quite a lot of the commentary that is instinctively hostile to foreign takeovers.
Thus for instance Crikey writes:
Now in the examples set out, the raiders do us a favour in the first instance – by improving the performance of the businesses they raid and make a profit by reselling. They improve the performance of the companies. It’s true that they capitalise the value of that improved performance on sale – so you could argue there’s no benefit left to Oz, but I’m pretty skeptical of that, though it is true they would make a healthy cut.
Crikey’s point (Michael Pascoe’s point actually) that they can lose money is intriguing – he seems to want them to lose money. Well that doesn’t do Oz much good (though it can if they buy at too high a price and have to sell at a lower one – as occured in the last boom and bust in Australia.
Then again none of what I’ve said is intended to endorse the tax break – I don’t know enough about it to offer anything but the most in principle comments.