There has been considerable news in the media about businesses suffering from the economic slowdown started by the Global Financial Crisis (GFC).
As a result of this, businesses are cutting staff, reining in their accounts receivables and lengthening their creditor payment terms to ease the cashflow until things are back to normal.
The governments of the world are also experiencing the GFC in the same way. After all, a government is essentially a national not-for-profit business with tax income as its revenue and budget spending as its expenses.
So, as business profits fall and unemployment rises, the tax base that the government receives its income from decreases accordingly. On the flip side, its expenses will rise as unemployment benefit payments increase and greater government spending is needed to boost the economy.
The recent trend of governments cracking down on tax evasion and offshore tax havens is the government’s way of protecting its tax base from being eroded.
The ATO has been operating two very successful programs (Project Wickenby & Offshore Voluntary Disclosure Initiative) which have actually turned a profit for the government.
The Australian Labor Party recently released a media statement on its website from Assistant Treasurer, Nick Sherry boasting of the success of these programs.
These two programs are the carrot & the stick of the ATO against tax evasion and offshore tax havens.
PROJECT WICKENBY
Tax revenue generated: $440m
Operating costs: $211m
NET PROFIT: $189m (as at Oct 2009)
Note:
With such a fantastic ROI for the government, it is not surprise that the program have been extended to 2012-13 with an increased budget of $430m.
Offshore Voluntary Disclosure Initiative
Tax revenue generated: $50m
Operating costs: Unknown but may be negligible due to the voluntary disclosure nature of the program. ie Tax amnesty
Perspective
When you take into account that $16 BILLION DOLLARS was sent offshore in 2008, these tax collections are only the tip of the iceberg.
Or from a business point-of-view, imagine having a potential market worth $16bn..! And, your company (ie. ATO) is the only one with the power to recoup it.
How much would YOU spend to get a piece of that pie? I bet plenty…!
Cheers,
Taxabull Team
You can follow us on twitter: twitter.com/austax
News stories relating to this topic
Similar Posts:
- Tax Fight: Round 2…! The Prize? $242m..!
- Australian Federal Budget 2009 – CASH IN vs CASH OUT
- A budget forged in the fire!
