Step 4 – Taxation Reform

Tax-transactions1

Too great a proportion of Australia’s tax is now bled from low and middle income earners, seniors and small businesses.

Originally, we considered abolishing all taxes to be replaced by a single bank transaction tax that would fairly tax everyone, whether they be private individual or corporation. On the surface, this sounded like a great idea.

However, we have been giving this a lot of thought and discussing the taxation question with various constitutional experts, and we believe that the People of the Commonwealth are not required to pay any personal taxes. Only companies should be subject to taxation.

Our Constitution states in Section 51: The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to:-

(xii.) Currency, coinage, and legal tender

In other words, only Parliament has the power to create money, both coin in silver and gold, and to create paper money.

Unfortunately, past governments have ignored the Constitution and allowed the International Central Banking system to dictate how we operate our economy and banking. This has resulted in us being enslaved to a debt-based system that is slowly destroying our nation.

Our Constitution clearly states that the Federal Parliament has the power to authorise the central bank to create all the money we need. The problem is that the Central Bank, the RBA, is a private corporation owned by the international banking cartel. They are not accountable to the People of the Commonwealth.

This must change and a Central Bank should be started, under the control of the People of the Commonwealth of Australia, as stated in our Monetary and Banking Reform proposal.

The original Commonwealth Bank of Australia was set up and owned by all the people of Australia. Australians were proud to save their pennies and shillings in the CBA, knowing that the Government had guaranteed their savings and was using their money to create a wealthy nation.

That all changed in July 1930, with the arrival of the Governor of the Bank of England, Sir Otto Niemeyer, who literally strong-armed the government of the day into giving away the bank and all its assets to the international banksters.

By then, the federal government had already imposed an income tax in 1915, to help fund Australia’s war effort in the First World War.

Between 1915 and 1942, income taxes were levied at both the state and federal level.  However, these taxes were supposed to have a limited life span.

Of course, the politicians saw how much money the income tax created and they conveniently “forgot” to rescind the Tax Act at the appointed time.

However, we already have at least two examples where the Federal Government was able to stimulate the economy in the past and create massive wealth by authorising the funding to build the East-West railway, and the Snowy Mountain Scheme. This proves that the Federal government does not need to impose taxes to build the nation and our economy.

The Constitution also states in Section 51 that:

  1. The Parliament shall, subject to this Constitution, have power to make laws for the peace, order, and good government of the Commonwealth with respect to:-
    (i) Trade and commerce with other countries, and among the States :
    (ii) Taxation ; but so as not to discriminate between States or parts of States :
    (iii) Bounties on the production or export of goods, but so that such bounties shall be uniform throughout the Commonwealth :
    (iv) Borrowing money on the public credit of the Commonwealth:

Therefore, the People of the Commonwealth should not have any taxes imposed on them for creating the wealth of our nation, or for consuming any fruits of our labour.

We propose that only companies will be required to pay the single bank transaction tax.

The banks can easily administer the tax without any financial burden simply by controlling tax collection electronically at the time of each transaction. So, if a company transfers money the bank will automatically deduct the taxation and forward it to the government’s General Ledger account where it can be used to administer the nation.

Personal Taxation?

If, at any time in the future, the government sees the need to raise money quickly for a specific purpose through taxation the question must be put to the people to vote on in a Referendum.

And if that happens, then a time limit on the tax should also be included in the referendum question. At the same time, we should take care to abide by the Constitution that any States’ taxes shall not exist upon another tax.

Any new tax could easily be implemented by using exactly the same flat transaction tax system as used for collecting company taxes.

No matter whether we are talking about personal or company taxation, by implementing a flat bank transaction tax administered by the banks we will eliminate unfair taxation across the board.

The main point of this proposal is that the People of the Commonwealth must be given a say in decisions to introduce any taxes, as long as we conform to the rules laid out in the Constitution.

ATO Investigation

Evidence is emerging from many sources that the ATO has no authority to collect taxes on behalf of the government. Nor does the ATO have any authority to pursue “unpaid taxes” through the courts.

However, due to the damage the ATO has done to numerous lives through their unlawful activities we propose setting up a Royal Commission investigation into their activities to determine which properties they have stolen to recover “defaulting” tax payments. People and families that have been unfairly hurt by the actions of the ATO should have the opportunity to present their case to recover their money and/or their property.

Our Ultimate Aim

Once our nation is financially stable we will calculate the Gross National Product at the end of each financial year and distribute any profit back to the citizens who have worked to create the surplus on a pro-rata basis as a reward for contributing your time and effort to make Australia great.

The pro-rata rate will be calculated on a number of factors, including years in the job, income, position, etc. This will encourage people to gain a better education so that they can achieve a better life for themselves and their family.

It will also discourage social security dependence, while ensuring there is sufficient money to look after those that are unable to work due to illness, incapacity, age, etc.

TAX REFORM

Bringing in the following changes to the taxation system will be subject to a referendum of the people:

Currently all sorts of variations to the tax system are used as incentives or rewards to individuals, businesses, etc. These variations create enormous complications and greatly increase the complexity of tax administration. It is more appropriate that, distinct from tax legislation, specific legislation be enacted to create incentives, etc.

As a result of these proposals we will see the following benefits:

  • All taxes currently levied to be dismissed.
  • Only the National Parliament shall legislate to collect taxes.
  • Taxation legislation shall not be varied to provide incentives or rewards to individuals or corporations.
  • Taxation legislation and regulations shall be used only for the purpose of taxation.

Automatic Electronic Transaction Tax

Except for inter-bank transactions, a single Automatic Electronic Transaction Tax (AEDT) shall be levied on all bank transactions by companies, corporations and other financial institutions.

As part of every transaction, banks and financial institutions shall electronically debit a percentage of the amount withdrawn and automatically transmit those funds to the Central Bank of the Australian Commonwealth as they occur.

This system of tax collection has been proven in Australia in the past and can be introduced and administered with minimal costs. Before being abolished as part of the GST agreements, a Transaction Tax was administered by banks on behalf of most State Governments. Furthermore, until recently it was the tax system used in Norfolk Island instead of income tax.

Until the People voting at referendum decide otherwise, an Automatic Electronic Transaction Tax of 0.1 or 0.2% shall be levied on all withdrawals from banks and other financial institutions with the exception of inter-bank transfers. The amount will be determined by a panel of financial experts appointed by the government to advise on the optimum percentage that will provide enough taxation income to run the government.

For example, an AEDT of only 0.1% tax, (one dollar in a thousand dollars) could generate enough revenue under current financial transaction history to fund all projects necessary to run the Federal and State governments.

The Automatic Electronic Transaction Tax (AEDT) system has been much maligned by economists trained in contemporary economics courses because Transaction Tax was not a subject included in those courses. Legislation separate from the tax system shall be used to achieve economic outcomes in certain sectors of the economy such as providing incentives, restraining economic activity or to penalise undesirable activities.

The arguments for and against the AEDT include the following:

  1. It is a “flat tax” and therefore “regressive” rather than the more desirable “progressive” tax. This argument fails to recognise that, under AEDT, ‘the more you spend, the more tax you pay’.
  2. The “cascade effect”. This is the effect on the cost of, say, manufactured goods when multiple transactions subject to AEDT occur during the manufacturing process. A National Parliamentary Library researcher has calculated that a full 0.1% AEDT (ie, a tax that would eliminate ALL taxes including income tax) would add as little as 25% to the end price of some manufactured goods. This is minimal when compared to the cascade effect of income tax on say, a manufacturing process involving multiple components and multiple workers subject to income tax.
  3. The AEDT is a “turnover tax” that contemporary economists consider “bad”. However, after WW2 the German “economic miracle” that occurred was largely due to the primary source of revenue being a turnover tax that, in 1957 was 4%!
  4. Some businesses will avoid the AEDT by using such ruses as barter. It is indisputable that, under any tax regime, some people will try to avoid paying their fair share. However, this will be minimal in a system extracting just $1 in $1,000 and legislation could easily outlaw any corporate schemes that do emerge.

The fact is, the AEDT is the most efficient and cost effective taxation system ever devised and it could be adjusted in incremental stages to eliminate all other taxes.

The abolition of all other taxes would remove a huge administrative burden from businesses and the Tax Office.

It would also mean that the humble taxpayer would not be required to keep records and would not be required to submit annual tax returns.

Furthermore it would free up enormous resources in the accounting profession currently tied up in unproductive record keeping, tax compliance and monitoring activities. These resources could then be redirected to the purposes for which they were designed – assisting business and government to better manage their core activities.

The AEDT system shall not be varied to achieve economic aims other than taxation.

Property Title Levy

The National Parliament shall be responsible for policy on property title levies in accord with conditions imposed in the Constitution after a referendum of the people. The Regional Governments we propose shall be responsible for implementing this policy and collecting levies. These funds shall be remitted to the General Revenue account at the Central Bank of the Australian Commonwealth.

Private Banks and Other Private Financial Institutions

Private banks and financial institutions shall no longer issue credit without financial backing.

Private banks and financial institutions may accept deposits from individuals and corporations. Such deposits shall attract interest of no more than 3% and may be loaned out by financial institutions at interest rates of no more than 5% reducing1.

A statutory authority, the Banking, Share Trading and Insurance Regulatory Authority shall regulate the lending of depositors funds.

Private banks and financial institutions may borrow money from the Central Bank of the Australian Commonwealth. Such borrowings shall be at a fixed interest rate of 3% per annum reducing. Private financial institutions may lend that money to individuals or corporations. Interest payable on such loans shall be fixed and the rate shall be a maximum of 5% per annum reducing (a set 2% markup).

Citizens or corporations other than Banks and Financial Institutions may borrow money from the Central Bank of the Australian Commonwealth at the fixed interest rate of 5% per annum reducing. The fact that the rates are fixed means that borrowers can be confident repayments will not escalate during the term of the loan, as is now the case.

The Banking, Share Trading and Insurance Regulatory Authority shall impose a code of lending practice on private banks and financial institutions. The Regulatory Authority shall monitor and enforce compliance to ensure that, except in the case of venture capital and for research and development, loans are adequately secured and the repayment of principal and interest is assured.

Private banks and financial institutions may charge a fair fee for services. The Regulatory Authority shall regulate and monitor bank and financial institution “fees for service”.

Private banks and other financial institutions shall not be authorized to borrow money overseas without authorisation from the Regulatory Authority.

All loans by banks and financial institutions to individuals and corporations shall be at a maximum interest rate of 5% per annum reducing.

Interest rates prescribed in the Constitution shall not be changed except by the People voting at referendum. This will be possible because interest rates will not be set by overseas regulatory bodies. Because the money will be created here in Australia we will be able to control all aspects of money creation and spending ourselves.

Repayment and security for all loans shall be negotiated in each case.These interest rates mean that there is a moderate cost for loan funds that is within the means of all Australians whether the loans are for business or private use.

1. ‘Reducing’ means that interest is calculated only on the amount of the loan outstanding at any one time.

Debit Cards

Private financial institutions may issue debit cards for use in Australia and overseas. Payments overseas shall incur the 10% surcharge applicable to money going out of Australia.

Credit Cards

Credit cards shall be illegal.

GOVERNMENT RED TAPE RESULTING FROM TAXATION

Our objective is to reduce red tape to the barest minimum. Many states have introduced legislation to assist or control small business. Generally, this has also increased the amount of red tape they must contend with, and we have seen a bloating of the public service and bureaucracy as a result. We have also seen the introduction of Globalisation and its affects on manufacturing and small business as most Australian owned companies are taken over by the multinationals, with help from foreign owned banks and the weak Australian dollar. Federal and State governments seem hell-bent on selling off all our assets, which is already causing increased charges for just about all the necessities of life.

The Coalition Liberal/Labor Governments call this good management.

We do not.

We say their high-cost policies have failed…and failed miserably for the People of the Commonwealth of Australia.

Our tax reforms are designed to produce the opposite result. We plan to reduce taxation, finance and fuel costs, and introduce tariffs on imports, putting this country back on a truly level playing field so that Australian industry and business is sustainable and competitive.

Controlling taxation and the banking system by the government will ensure that we can financially compete internationally on our terms.

TARIFFS

Tariffs or quotas on imports will be re-introduced to enable Australian industry and business to compete with foreign products without having to reduce our wages or standard of living to those countries that employ people on virtual slave labour rates.

Click on the pointing finger for the next part of the Plan…


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