Tax again

There is a fascinating article in the AFR today outlining how IKEA avoids paying tax here in Australia and many other places as well.

And Harvey Norman is worried about the unfair advantage of internet shops?

It doesn’t look like IKEA is breaking any laws and, really, it is up to the government to change them if there is a problem.

For me the fundamental issue is company tax – it makes no sense in these days of electronic money and hard-core fringe benefits tax.

What we need is a tax regime with two items only:

1. A consumption tax rate that increases with total consumption by an individual, and

2. A flat rate ‘holding’ tax for all electronic transfers of money out of Australia. If this was earned in Australia and is heading for overseas consumers then it would attract the top rate of the consumption tax.

Problem solved.