We’ve Been Stitched Up for Years

Tax.

No one likes paying it. And no one wants to pay more than they absolutely have to.

Lower taxes means less government, less bureaucracy and less regulation.

A prosperous and resilient society takes personal responsibility seriously, and only relies on government in limited circumstances.

Sadly, there are not many prosperous and resilient societies left. We look to government to do this and do that. Fix this problem and right this wrong. Whatever the ailment, we expect the government to ‘do something’.

Of course, the government is a willing helper. But in order to do its work, it needs resources. It needs an income. That income is tax.

And tax is something that no one likes to pay, especially if the system seems ‘unfair’.

Which brings me to investigative journalist Michael West’s recent article on Australia’s biggest tax dodgers, following the release of data from the Australian Tax Office yesterday.

Once a year, the Tax Office unveils its data showing how much tax the biggest companies in Australia paid, or in one-third of cases, didn’t pay. Once again, despite the nosebleed rise in gas prices, the gas giants skimped on their tax. That’s zero from Origin, Shell, Chevron, Santos, BG and Exxon.

Here they are drilling Australia’s natural resources, finite stuff, sending it offshore, and paying no tax.

There are now four years of published data from the ATO. For the fourth year running, the biggest of the US oil majors, Exxon, paid zero tax. Despite revenues of $8.4 billion, Exxon managed to entirely eliminate every skerrick of taxable income. That is, zero tax paid despite more than $33 billion in total income booked over four years.

Its electricity customers will not be happy to hear this but Energy Australia — with its British Virgin Islands parentage — has now skived out of paying tax for four years on the trot. Last year, $6.3 billion in income reduced to zero taxable income and zero tax. This used to be a NSW government asset.

Shell Energy zero, BG International $3 billion total income, zero taxable income, zero tax. Origin energy paid zero tax despite recording $188 million in taxable income. Santos booked $3.7 billion and recorded zero taxable income.

As I said, no one likes paying taxes. And nor should we. As Kerry Packer famously said,

If anybody in this country doesn’t minimise their tax they want their head read. As a government I can tell you you’re not spending it that well that we should be paying extra.’

But here’s the issue. In many instances, large corporations simply game the system to avoid paying tax. It’s not tax minimisation, it’s tax ‘avoidance’, through the use of tax havens and complex international tax loopholes.

If corporates avoid paying tax, where does the burden fall? Onto individuals, who don’t have the resources or the deceitfulness to game the system.

This is what the riots in France are about

France is a semi-socialist state. Government tax revenues represent 46% of the economy. But large corporates dodge taxes. They use the system that was set up for them to use.

That’s why I say its semi-socialist. The elites get to keep their wealth. They work hand-in-hand with governments (see below). The workers have no such connections.

That’s why the tax burden falls increasingly to the ordinary citizens of the country, and now they have had enough.

This will increasingly happen in Australia too. Our politicians — who are part of the game — have no desire to stop the tax dodging. Nor do they have any desire to reduce their spending and influence on the economy.

This trend will make it increasingly difficult to enact tax cuts for workers. We won’t be able to keep more of what we rightfully work for and spend it in ways we see fit.

And that will hurt economic growth at a time when we are running out of growth options. Wages growth has been weak in Australia for years. The best way of stimulating the economy is not via interest rate cuts, it’s via an across the board tax cut.

But it’s not going to happen. Governments don’t want to reduce revenues, nor do they want to clamp down on their mates in big business.

Let me give you an example of how governments and elites work together. This morning, I had the testimony into the Clinton Foundation on in the background while I worked.

In the Uranium One deal, it turns out that the Clinton Foundation received $140 million from the various players who stood to benefit from that deal. Initiated by a Canadian businessman, it ended up giving the Russians control of significant quantities of uranium. All this happened on Hillary Clinton’s watch as Secretary of State, hence the ‘donations’.

There were various other ‘deals’ with the Clinton Foundation cited. And it was revealed by forensic financial investigators that there is a strong likelihood of tax fraud by the foundation. That is, proceeds were not used how they were supposed to be, meaning the foundation shouldn’t be tax exempt.

The bombshell from the testimony was the inference that an open criminal investigation into the foundation, by the FBI, is currently taking place. That perhaps explains why US Attorney John Huber didn’t testify. The investigation is still ongoing.

I assume this is a different investigation into the soft one that yielded nothing, done by Obama’s Department of Justice cronies.

Do you know Australian taxpayers contributed $88 million to the foundation from about 2006 to 2016? Coincidentally, the donations stopped in November 2016, just after Trump won the election…

Was it just altruism on behalf of the government, or did we expect to get something in return? If the latter, it’s been a pretty dud investment.

But that’s not how it works. The elites use other peoples’ money to gain favour for themselves.

The system has been rigged for a long time. But now the people are starting to wake up to it. That’s what Brexit, Trump and the riots in France are all about. The establishment media call it the rise of ‘populism’, ‘nationalism’, or a reaction by the ‘embittered and racist’.

Bollocks it is.

It is growing awareness that we have been stitched up by the elites in government and business for years.

And we’re not going to take it anymore.

Regards,

Greg Canavan,
Editor, The Rum Rebellion


Greg Canavan approaches the investment world with an ‘ignorance is bliss’ philosophy. In a world where all the information is just a click away at all times, Greg believes we ingest too much of it. As a result, we forget how to think for ourselves, and let other people’s thoughts cloud our own.

Or worse, we only seek out the voices who are confirming our biases and narrowminded views of the truth. Either situation is not ideal. With regards to investing, this makes us follow the masses rather than our own gut instincts.

At The Rum Rebellion, fake news and unethical political persuasion are not in the least bit tolerated. It denounces the heavy amount of government influence which the public accommodates.

Greg will help The Rum Rebellion readers block out all the nonsense and encourage personal responsibility…both in the financial and political world.

Learn more about Greg Canavan's Investment Advisory Service.


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