Your best investment in 2016? Probably a political donation

Yesterday I went in search of evidence of the well-known complexity of Australian tax law, finding it in the 11 volumes of the 1997 Income Tax Assessment Act.

A hard copy will set you back almost $350. Running to 4695 pages, the truck that delivers these tomes could also drive through the many loopholes that complex legislation inevitably creates. What's the expression, a lawyers' picnic?

A debate on the tax system is long since due.

First on the agenda is a rise in the GST, probably to 15 per cent. One can argue the merits or otherwise of a value-added tax increase but at least this is an issue of substance. What else?

There's a proposal from the federal government to get backpackers to pay more tax and another from the Opposition to charge smokers $40 a for a pack of ciggies.

The issues on the table give away the big lie at the heart of the way these debates are conducted: that we can have tax reform as long as the reforms don't have any victims.

The impact of any increase in the GST will be largely offset by changes in other areas of income tax. The policy can be designed to ameliorate the effects of its own impact. Weird, but that's how it works.

Backpackers don't count because they don't vote here, even though they contribute about $3.5 billion to our economy each year. But who cares when there's an extra $540 million over four years in tax revenue on the table?

You can also forget smokers – the lepers of our time - because addicts deserve ridiculously high taxes, not sympathy or compassion. Unlike the bankers that blew up the global financial system, they must pay for their sins, not have the taxpayer step in and do it for them.

To borrow a phrase from Douglas Adams, both are a case of "so long, and thanks for all the money".

There was a time when serious reform was possible, but that time has long since passed. Now even a sensible fringe benefits tax policy on company cars is beyond us.

The Rudd Government's modest proposed changes were expected to raise $1.7 billion but were quickly dropped  by the Abbott government after the salary packaging industry kicked up a fuss and lobbed $250,000 in the direction of the Liberal Party.

The fact that we even have a salary packaging industry is indicative of the problem. Without those 11 volumes of legislation, this is a sector that would not exist. But it does, and includes three listed stocks. Now it's so powerful we can't get rid of it.

If a small sector like this can influence policy with ease, imagine what can be achieved by the big banks and industry superannuation funds?

The mining sector spent a mere $22 million to reduce the impact of a resources tax to zero, effectively ending the career of an elected prime minister.

The surprising thing is not that this stuff happens, but how little it costs to make it happen. Whether red, blue or green, politicians are cheap. Really cheap.

Until the political system is less responsive to the needs of sectional interests and is instead driven by the interests of the country and its citizens, we can forget about genuine tax reform. The current debate is a sham, a chance for vested interest to get more of what they want, not what the country needs.

What are shareholders to do?

Do what everyone else does of course and follow the money. History shows that political donations can offer an exceptional return on investment. That begs a question of all companies threatened by legislative change, one that shareholders might want to pose to boards during AGM season: If you're not making political donations, why the hell not?