Debate will no doubt rage for years to come whether the “Kev 07” stimulus package worked for Australia. I must admit that I queried the benefit of it when it was announced on 3 February. I struggle to find the benefit of giving someone $900 if they are at risk of losing their $50,000 job.
The same arguments about the baby bonus & plasma TVs are also being raised about the stimulus payment. Foreigners & the dead got the cash. Yet those that needed the government handout the most seemed to have been the ones that didn’t earn enough as they weren’t technically a “taxpayer”.
There have been complaints, quite justifiable, for some accounting firms charging $60 handling fees. National credit card debt continues to rise with it now around $45 billion. And we had announced in the Federal Budget in May that we have a record budget deficit.
Yes Australia avoided a technical recession when the March GDP figures were released but really what impact did the stimulus payment make to the bottom line. And is it inevitable that we will fall into recession anyway in 6 months time?
National unemployment continues to rise with 1 million expected to be without a job in the next few years.
Business confidence has risen in recent months & I can personally tell you that virtually everyone of my clients were very happy to be getting $900 on 4 February.
So I ask again has the stimulus payment worked? I don’t think we really know the answer to that one.
But what I do know is that the nation’s tax compliance has improved for individuals anyway. About 4 weeks ago, the ATO had estimated that there were approximately 800,000 people (almost 10% of taxpayers) that were eligible for the tax bonus but had yet to lodge their 2008 tax return. 2 weeks ago that figure was 500,000. Last week it dropped by to 280,000 (or $252M in payments!). My office had its busiest June ever as people came out of the woodworks to get their $900. As I told them, if you saw it on the ground you would pick it up ... so why not bend your back.
Since 3 February, there have been over 2.2 million tax returns lodged. This is a 20% increase for the same period in prior years. Over 318,000 returns for prior years have been lodged as well. And there have been alot of real slackos as well. More than 2,000 people have since come clean & lodged 9 or more years of tax returns.
Happy New Financial Year everyone! May the new year bring prosperity to your business & the economy.
Do you think the stimulus payment has worked? Has your business noticed a pick up in activity since 3 February?
Monday, June 29, 2009
Has the stimulus payment worked?
Monday, May 11, 2009
$260,000 Jobs - Where Do I Apply?
Last week we saw the announcement of winner of “the best job in the world” up in Queensland. What a great job. $150,000 for six months “work” telling the world how beautiful it is staying on those beautiful tropical islands. What a lucky “you-know-what.”
That was one of the great marketing campaigns. The whole world found out what a lucky country we are living in. But I have found out some info to truly knock your socks off & realize just how lucky.
How would you like a $260,000 job? Don’t think you have a chance? Don’t worry there are 200,000 of them. Got your interest yet? Where do you apply?
Well looking at the reports on the impact of the Federal Government’s stimulus package, that is exactly what has happened in Australia in the past year.
The Prime Minister yesterday announced that an estimated 200,000 jobs have been saved as a result of the two stimulus packages in the past year. Great news headline. When I heard that it sounded great but hang on a minute. I worked out that given the cost of the packages totaled $52 billion, that equates to $260,000 per job potentially saved.
The headline doesn’t look so attractive now, does it? Imagine the cost per job if we find out that only 100,000 jobs have been saved.
With record deficit budgets, perhaps the Government would have been better off doing nothing at all. Instead wait and see if there would have been an 200,000 extra on the unemployment line this time next year and provide extra Centrelink benefits to those people then. Based on current Centrelink rates, the extra unemployment could be carried for more than a decade for the same cost.
Perhaps it would have been better for businesses to have been the direct benefactors of the stimulus packages. After all they are the ones that need to incentivized, via grants or lower taxes, to create more jobs and kick-start the economy again. If you can’t make a decent profit when you run a business, why take the risk in the first place?
As I say there is no point paying someone $900, if they are going to lose their $50,000 job.
What do you think the Government should have done last year? Should they have tried to stimulate the economy?
Monday, May 4, 2009
You may change the tax rules, but we will still find the loopholes!
Aaahh … Federal Budget week. It always brings so much joy to accountants throughout Australia. Why? Because you matter who is in Government & no matter how long they have been in power, they always feel that there is a need to tinker with the tax rules.
FBT, CGT, GST, Simple Super, Simplified Tax System, Consolidation, Personal Services Income, Investment Allowances, Senior Australians Tax Offsets, highest marginal rates, rebates … the list seems to go on & on.
And when they tinker with the tax rules, there is always one common denominator and that is that these changes always bring more work to accountants around Australia.
Legislation changes also seem to provide an opportunity for the “boring number crunchers” to show their “creative flair” to try and create a loophole to get around the tax change. Every year the government changes the tax system and every year there is a new strategy that comes into play to combat. Make no mistake, the rich – or rather their accountants’ - will always find a way to pay as little tax as possible.
Even the $900 stimulus payment has strategies like co-contributing into super to make it worth $2,250. Something simple as a handout has a loophole to make it more attractive and against the grain of its original purpose.
I am seeing a number of accountants about town with a bit of a smirk this week. This is because they have heard all the whispers and leaks of dramatic changes in next Tuesday’s budget by Mr Swan. Changes to marginal tax rates, super surcharges, stopping of imputation credits, and the like. I am not really sure if it will make a lot of difference at the end of the day.
The real winner? Not the Government. Not the poor. Not even the rich. But the accountants’ bank account of course because they get to charge more and more fees as the rich still find a way to pay the same amount as before.
Why does the Government still persist in changing the laws all the time? I don’t know but I reckon they will lose some voters next Tuesday night.
If you want to see accountants cry foul at the budget … and I mean really cry foul & not pretend that they do … make tax returns no longer compulsory and give taxpayers a cheque automatically from the Government based on an estimate of their income and expenses. A budget that takes business away from accountants … I’d like to see that!
