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Taxing problem govt’s fault

SOME years ago I was approached by a salesman who sold tax-effective investments to people who worked in WA’s mining sector.

Over a coffee, with the man-datory swirls, squiggles and flow charts that salesmen love, he outlined his team’s sales methods during their month-long sortie into the Goldfields before June 30.

Basically a bunch of whitegoods salespeople taking a lucrative break from their routine work, the team had good contacts with various mine foremen who would generate a crowd at the mine mess in return for a bounty based on head counts.

“Investors” would queue dozens deep before tables of “advisers”.

I was told each person was given three minutes advice to base their investment decision, if they didn’t sign on the spot they were told to go to the back of the line.

It was all part of the strategies snake oil salesmen have always used to trick the gullible — the latest being a slick suit and tie and promises of tax avoidance dressed up as financial advice.

Some of these salesmen didn’t even pay their motel bills.

The result has been a lot of heartache. Wise investments have been flogged at fire sale prices to cover tax bills incurred for the most ridiculous investment concepts.

Others simply wait for the day they are bankrupted by the tax penalties hanging over their heads.

Of course, not all these people were miners and not every scheme was as shonky as this.

So who is to blame? Is it the salespeople who can spot a sucker a mile off? Is it the corporates who dreamt up the schemes or the investors who couldn’t get enough of deals which seemed to be too good to be true? What about the financial advisers and accountants who often gave the thumbs up to schemes with little or no research?

Then again, is the blame with the tax office which took too long to discover the problem and reacted too harshly, seemingly too late? Or is it the politicians whose voracious needs for budget surpluses has them turning on their constituents.

If there was not a huge amount of money involved, there would be an easy case for writing the whole thing off as a bad mistake but for centuries governments have known the need for heavy handedness to ensure taxes are paid.

The current Federal Government can’t risk allowing people to think they can get away with avoiding tax. At least the little people that is.

If you actually owe a lot of tax it seems to be a different story. That is perhaps why this issue has got so many people hot under the collar.

For instance, there is talk that, after skipping Perth in the 1980s with a huge tax bill, one multi-millionaire offered the tax man a deal — accept a small amount of what was owed or the businessman would never return.

On the basis of something is better than nothing, it is understood the deal was accepted.

The average taxpayer has little opportunity to make such deals, instead they seem to pay more tax every year.

So-called tax reform hasn’t changed that perception. Small tax cuts fly in the face of the Government’s big gains from the GST, which is more complicated than necessary and may possibly be driving the country into recession.

As the country faces the need for capital to resurrect R&D, the need of tax breaks will surface again, as will the charlatans who see only the loopholes rather than the intention of the law.

At the end of the day, the Government is to blame for these problems because most of them would not exist if Australia was not one of the highest taxed countries in the world.

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