Tax dodgers project alarming revenue shortfall #Newscorpfail

The Murdoch press is touting a report from Price Waterhouse Coopers, predicting all manner of disaster for Australia if we do not mend our debt ridden ways. A typical example is a projection of $1 trillion in debt by (IIRC) 2037. There’s no link in the stories I’ve read, and nothing obvious on the PwC website, so I’ll make some more general observations.

* It’s startling to read this kind of sermonizing from an outfit like PwC, recently described by the British Parliamentary Public Accounts Committee as ‘promoting tax avoidance on an industrial scale’. If we are facing a fiscal crisis, shutting down firms like PwC seems like an obvious prerequisite to achieving a solution

* Even on the hypothesis that this was in fact a serious effort at assessing our fiscal condition, why would anyone give any credence to one of the accounting firms that gave us the Global Financial Crisis

* The projections are highly implausible, though without access to the report I can’t point to the specific dodgy assumptions used to derive them.

* The same issues are regularly examined by the Commonwealth Treasury in its Intergenerational Report. The 2015 report was legally required to be published on 3 February but has not appeared. Now instead of the IGR, the government’s media arm comes out with this piece of tripe. Was the IGR not alarmist enough for Hockey?

Update My point about the IGR was pure conjecture when I wrote it. But on TV last night I saw Hockey pushing the PwC “report” (still vaporware, AFAICT), even though he is supposedly too busy to fulfil his legal obligation to release the IGR.

Further update Commenters Megan and Liam have dug up a link to a two-page paper from a talk given a few days ago. This in turn links to publications from 2013 and 2014, drawing on estimates published in 2012 which (I imagine) rely on data going back even earlier. The same alarming projections appear, but still without any basis for the calculations. To sum up, this is a total beat-up.

52 thoughts on “Tax dodgers project alarming revenue shortfall #Newscorpfail

  1. John Quiggin :
    I’m not buying this. The OECD Guidelines on Transfer Pricing (one of many of the dodges marketed by PwC) run to 371 pages.
    http://www.oecd.org/tax/transfer-pricing/transfer-pricing-guidelines.htm#TableofContents
    I imagine that turning Guidelines into legislation that can stand up against the PwCs would mean even more pages than that.
    Of course, it would be an improvement all round if we scrapped most of the personal concessions, particularly as regards super. But retail avoidance exploiting this kind of loophole is, I think, on the decline. It’s the industrial stuff that’s the big problem, and that is bound to be difficult as long as we have complex global corporate structures.
    Simplifying global corporate structures amounts to pretty much the same thing as shutting down the firms like PwC that design them.

    John, I’m just wondering if we have now got to the stage that tax deductions are no longer an equitable or efficient government intervention in the market. Perhaps to simplify we should re-look at Gross income as the taxable amount. I would think the free marketeers would love the idea of less regulation surely. If a firm makes a (book) loss every year why should it be encouraged to continue operating?

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