The Greens are proving that small is ugly

Progressive thinkers within the Greens Party will be scratching their heads at the nonsensical decision to oppose planned tax cuts for larger companies.

The Greens have done something remarkable by choosing to oppose the Gillard government's planned cut in corporate tax for any company turning over more than $2 million – they've placed a punitive tax on employing Australians.

The larger a company becomes and the more people it employs, the more wicked it becomes, seemingly. So why not tax our corporate success stories back down to size, and make Australia an SME paradise. Small is beautiful!

Actually, I'm probably being unfair in labelling this a 'Greens' policy. It has all the hallmarks of one of Saint Bob's commandments.

Progressive thinkers within that party will be scratching their heads and wondering why a company's size is a measure of its wickedness. The really, truly progressive ones (there are a few) will be spitting chips at the way this position undermines the notion that 'economic growth' and 'environmental harm' can be decoupled. They can, of course, but putting artificially clamps on big business doesn't help that process – while driving to work in a hybrid car, or enjoying a train line built by a construction conglomerate, does one ever think: "Great, but I wish this had been built by companies earning less than $2 million!"

That kind of stone-age thinking has no place in achieving even the ecological objectives promoted by the Greens.

The main thrust of the argument seems to be that 'corporations' are wealthy and sub-$2 million SMEs are not. Perhaps Bob Brown will share his list of wealthy corporates with me so I can shift my retirement investments accordingly?

Tax reform is important for a number of reasons, and equity is an important factor, but anyone who as worked inside a 'corporation' knows that tax evasion comes with a different set of cost/benefit considerations – criminal liability hangs over the head of middle managers and directors alike. In sub-$2 million operations the owner of the business is also chief executive officer, chief financial officer and chief everything else and has numerous incentives, and means, to find 'creative accounting' methods to dodge the tax man. Most do the right thing, but when small companies dodge tax their actions are much harder to trace than the paper trail that forensic accountants follow through corporations.

As discussed on Tuesday, federal governments are facing an uphill battle from here on in to keep the budget in the black without raising the tax take (A fork in Labor's road to salvation, March 13). Labor, for all of the 'big government' criticisms made against it, is managing tax receipts at below 24 per cent of GDP. That was not achieved in nine of the 11 years of the Howard government (in 2000/01 it hit 25.9 per cent).

Labor should be congratulated for that.

On the other hand, the Gillard government's overall vision of tax reform is a mess – cherry picking from the Henry Review, using wealth redistribution to sell its (nonetheless important) carbon pricing plans, and ignoring the low-hanging fruit of reform such as a GST increase.

Keeping downward pressure on tax receipts and expenditure is good policy, particularly in the current climate of global instability. And Labor's highly politicised tax reform agenda notwithstanding, cutting company tax bills across the board is part of that process.

But the Greens appear not to understand the economics of the situation, or if they do they are allowing some crude grab for SME votes (good luck with that one) to get in the way of sound policy.

Worse, however, is Tony Abbott's opposition to the cuts. Yes, Mr Abbott, we know you don't like the mining tax (which Labor is linking to the tax cuts) – you've mentioned that quite a few times in parliament. But the mining tax will go through anyway, with Greens support. What business organisations are pragmatically asking for – to at least be allowed the tax breaks the MRRT funds – should be supported.

If Tony Abbott does lead the coalition to power, he can set about a more theoretically pure form of tax reform by following a holistic reform blueprint (like the Henry Review) and not cherry picking for political gain.

In the meantime, he should expose the Greens' 'small is beautiful' nonsense for what it is and, through gritted teeth, pass this tax cut.

Follow @_Rob_Burgess on Twitter


SMS Code Sent…

Hi {{ user.FirstName }}

Looks like you've already taken a free trial

We have sent you a code via SMS to {{user.DayPhone}}

please enter this code below to activate your membership

If you didn't receive SMS code please

Looks you are already a member. Please enter your password to proceed

Verify your mobile number to unlock a FREE trial

Please sign up for full access

Updating information

Please wait ...

Related Articles