Editor's note

Being showered in money you didn’t expect is a nice problem to have. The government has ended the year an extraordinary $31 billion richer than it expected at the time of the May budget - or it would have, had it not decided to spend half of it, mostly in the form of as-yet-unannounced tax cuts.

Which will be okay if the extra riches last. One reason they might not, is that the resurgence in tax takings from mining companies mightn’t last if the latest resource price boom peters out.

Another is that mining companies (and technology companies) are adept at shifting profits into lower tax jurisdictions such as Singapore, Ireland and Bermuda. Last month the Tax Office won half a billion dollars from BHP in a dispute over whether its marketing hub in Singapore was a device to avoid Australian tax. BHP settled without making an admission.

One response is to tighten tax laws, but it’s a never ending battle. Another, outlined this morning by Ross Garnaut, Craig Emerson and Reuben Finighan is to replace Australia’s system of company tax with a simpler system they are calling “cashflow tax”. It would tax only what came in minus what went out, excluding what went out in interest payments and non-market fees paid to overseas affiliates. They reckon it could raise more tax at a lower rate, and there would be less need to cut the rate. They think it would also boost capital investment and cut corporate debt. Too good to be true? They road-tested it at the Melbourne Economic Forum last week to a generally positive reception. What do you think?

Peter Martin

Editor, Business and Economy

Top story

A simpler company tax system would collect more and could fund a lower rate. Shutterstock

Here’s a long-term budget fix that would boost investment: replace company tax with cashflow tax

Ross Garnaut, University of Melbourne; Craig Emerson, Victoria University; Reuben Finighan, University of Melbourne

The budget looks good, for now. But the surge in taxable profits will subside as companies find ways to shift profits offshore. We've come up a better way to tax onshore what happens onshore.

Solenosmilia coral reef with unidentified solitary yellow corals. CSIRO

Exploring Australia’s ‘other reefs’ south of Tasmania

Nic Bax, CSIRO; Alan Williams, CSIRO

In the cold southern oceans, underwater mountains support deep-sea reefs.

The issues surrounding the use of genetic data are complex. image created by James Hereward and Caitlin Curtis

Dramatic advances in forensics expose the need for genetic data legislation

Caitlin Curtis, The University of Queensland; James Hereward, The University of Queensland; John Devereux, The University of Queensland; Karen Hussey, The University of Queensland; Marie Mangelsdorf, The University of Queensland

Police have powerful new genetic tools. How are we going to regulate their use? A Genetic Data Protection Act is one solution to ensure confidence in the way DNA is accessed and used.

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