What our tax collectors do in their spare time

Tax collectors had a bad press in the New Testament.

That, according to biblical scholars, was because it was understood, in those days , that if a tax gatherer could collect a little extra, on his own account,  no-one would notice.

But those dubious practices are long gone, aren’t they?

Aa a  previ0us Tax Commissioner, Trevor Boucher, used to  say:”We collect just what is owing.  Not a cent more.  Not a cent less.”

Well, Private Briefing can now reveal that is not quite true, any more.

For some years now, the Australian Tax Office has been regularly sending out bills, for tax that is not actually owed.

It believes it is doing the small businesses, on its mailing lists, a great favour.

We are not, of course, suggesting any corruption here, or that any tax is being diverted into personal use, as it apparently was in biblical times.

The system works like this.

The small business owner pays tax regularly, over several years,  either at the time quarterly Business Activity Statements are filled out, or annually, if that is permitted.

But Australia’s benevolent Tax Office still worries that the entrepreneur still might not be able to pay the full  Pay as You Go amounts, owed on his  employees’ salaries, at the end of the tax year.

To prevent that the ATO sends  out separate bills, based on its own calculations of average tax due,  over previous years.

This ignores a reality or two, like age.  A particular business, for example, migbt reach its peak earnings when its owner is, say, 55.

But as earnings fall, when that owner goes into semi-retirement, say five to ten years later, his company still keeps getting bills based on those peak operations.

Do those bills have to be paid, even though those amounts are not actually  due?

We don’t yet have a High Court ruling on that.

But one entrepreneur we know was advised that he would be “wise to pay it.”

That money will be put to y0ur credit at the ATO, he was told.

And earn interest for the taxpayer?

That question  should get a laugh, down in the basement at the ATO.

We need not  wonder, any longer, what happened to Monty Python’s  scriptwriters, when that hilarious show ended, several years ago.

They are all working now for the Australian Tax Office, designing new methods of tax collection.

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Market surges – but politicians still cautious about recovery

The Dow Jones industrial index rose strongly last month, gaining almost 8.6 per cent in July.

This shows, quite clearly, that many American investors now  believe that the worst of the global economic crisis is behind us.

American – and Australian – political leaders, though, still doubt that.

US President Barack Obama, for one, is dogmatic about that.

“As far as I am concerned,” he said,”we will not have a recovery while we keep losing jobs.”

Australia’s Treasurer, Wayne Swan, is equally blunt.

“Australia still faces tough challenges,” Mr Swan told Channel 9, in an interview yesterday.

So what is going on here?  Surely the investors, too, know something.

And, one said over the weekend, he had never seen markets “just stabilize.”  Clearly he, at least,  expects too see a recovery, in the months ahead.

The economist, Chris Richardson, probably has the best explanation. He says markets move quickly, but economies move slowly.

So how bad has it all been, really?

The Opposition Leader, Malcolm Turnbull, argues that the present crisis hasn’t been as bad, at least for Australia, as the 1990 recession.   And he accuses the Prime Minister, Kevin Rudd, of recklessly putting the next generation of Australians into debt, to alleviate it.

New figures, though, now show that the  US economy shrank by 3.9 per cent, in the first 12 months of its current recession.  That is  its worst slump since the Great Depression.

Although Australia now depends, at least more directly, on the Chinese and Japanese economies, that is still a figure that no Australian government can afford to ignore.  The US, to a large extent, is still the engine of the global economy.  It is still, for example, both China’s and Japan’s biggest customer.

This will be a busy week, for local economy watchers, too.

The Reserve Bank Board, for example, meets tomorrow (Tuesday) to review Australia’s interest rates – and remarks the Bank’s Governor, Glenn Stevens, made last week show, beyond doubt, that he is starting to worry about resurgent inflation.

However a decision either to raise – or indeed cut – interest rates tomorrow would be a big surprise. Most analysts expect the board to simply keep rates on hold, once again.

Board members will see two important economic indicators, before they announce their decision, about 2.30 pm tomorrow.

They are the  figures the Australian Bureau of  Statistics is releasing for movements in  both House Prices and Retail Sales during June.  Both figures are due to be released at 11.30 am tomorrow.

The Bureau is also planning to release its Internati0nal Trade statistics for June on Wednesday.

Most interest, though, will be on the Bureau’s Labor Force figures for July.  They are due out on Thursday this week.

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