John Roskam has an essential article in the Australian Financial Review this morning, dispensing with many of the myths surrounding the current tax reform debate. It begins:
There are so many things wrong about the current tax debate it’s difficult to know where to begin. For a start, Australia is not a law-tax country. Second, the wealthy don’t get any special treatment from the country’s tax system. And third, the suggestion that multinational companies should pay tax, not according to what the law requires but according to the personal interpretation of politicians of what’s “fair”, is ludicrous – and dangerous.
Indeed, asking companies to voluntary pay a “fair” amount, as well as some conduct from recent Senate hearings, undermines the rule of law:
Two of the relevant principles of the rule of law are that laws must be understandable and they must be able to be obeyed. Because everyone’s definition of “fair” is different, it’s impossible for any company executive to ever know whether they have complied with the Labor/Greens specification of “fairness”. If Labor and the Greens want to change the tax laws affecting multinationals, by all means they can try. But in the meantime politicians should not be expecting anyone to obey their personal whims.
The former Labor minister Craig Emerson said in these pages a few days ago that the Senate hearings against multinational companies “involve an element of rough justice, since some of the corporations making invited appearances might have done little or nothing wrong”. What’s happening is worse – it’s a breach of the rule. If we’re now prepared to accept our elected representatives handing out “rough justice” the country is in even more trouble than we’ve realised.
On June 15 we’ll be celebrating the 800th anniversary of the Magna Carta. The achievement of the Magna Carta was that it began the process that replaced the arbitrary rule of kings with the rule of law. The recent behaviour of senators (Sam) Dastyari and (Christine) Milne isn’t very different from the “rough justice” that once upon a time King John handed out.
You can read the whole article here.