Review of Business Taxation Department of the Treasury



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The Secretary

Review of Business Taxation

Department of the Treasury

Parkes Place

CANBERRA ACT 2600
16 April 1999
Australian Wage & Salary Earners

Overtaxed and Overpriced”
Dear Secretary,
Please accept my submission entitled “Australian Wage & Salary Earners Overtaxed and Overpriced” dated 16 April 1999 for the consideration of the Review of Business Taxation.
The following electronic copies of my submission is enclosed except for hard copy attachments:


  1. RBT9901.DOC “Australian Wage & Salary Earners Overtaxed and Overpriced”;

  2. RBT9902.DOC This letter;

  3. IC9701a1.DOC Annex B “Automotive Industry Overpricing Submission No. 97”;

  4. IC9701-p.PPT Annex C “Automotive Industry Overpricing Presentation”; and

  5. IC9702a2.DOC Annex D “Automotive Industry Overpricing Benchmarking Supplement”

As you will see from my attachments, a number of strategic themes stand out:




  • Wage and salary earners must be treated with equality in your review of business taxation. Not only are they just employees but they are both investors and customers of business. Wage and salary earners require full transparency of all direct, indirect and user pays charged levied by all tiers of government;

  • The Australian domestic economy is overpriced and this has led to a real economy that is significantly underdone for the majority of the population and unnecessary unemployment. The cause and effects of this overpricing needs to be fully understood before tax reform is implemented as the current proposals are not aimed at significantly reducing prices; and

  • The proposed GST is a significant competitive advantage to big business compared to SMEs and disadvantages the domestic economy as it has been designed to subside exporters and overseas markets.

If I can be of any further assistance to the committee, please let me know.


Yours faithfully,

John E. Caldecott

PO Box 190,

HENLEY BEACH SA 5022.


Home Phone/Fax: 08 8353 4225

E-mail: jec@camtech.net.au




AUSTRALIAN WAGE & SALARY EARNERS

OVERTAXED & OVERPRICED


prepared for the


REVIEW OF BUSINESS TAXATION

by
John E. Caldecott

16 April 1999



Document No.: RBT9901


Table of Contents


1 EXECUTIVE SUMMARY 6

Australian PAYEs Overtaxed & Overpriced 7

3 Situation Review 8

4 Tax Reform Not a New Tax A New Tax System 8

5 Lower Costs Lower Prices 8

6 Taxing Embedded Taxes 8

7 Exporters Share Cost of Government 9

8 Public Corporations 9

9 Affordability 9

10 GST vs WST 9

11 Tax Limits Established 9

12 PAYES & Transparency 10

13 Price Determines Demand 10

14 Business Entities - Students, PAYE and Pensioners 10

15 GST Is No Panacea 10

16 GST Will Reduce Margins 10

17 Taxation Reform 12

18 Infrastructure and Natural Resources 12

19 CPI & Real Prices 13

20 Governments & Debt 13

21 Governments & Prices 13

22 Governments & Private Sector 13

23 Governments & CPI 14

24 GST vs Company vs Employee Income Tax 14

25 Automotive Industry Submission No. 97 14

26 OverPricing Submission & Presentation 14

27 Benchmarking 16

28 APESMA Publication - Supporting Material 19

Australian PAYEs Overtaxed & Overpriced 19

38 National Competition - Tax Reform Conspiracy 24

39 The role of the media 25

40 Taxation 27

Australian PAYEs Overtaxed & Overpriced 32

41 Mandates 33

Australian PAYEs Overtaxed & Overpriced 36

42 Conclusions 33

43 Recommendations 35

44 EXECUTIVE SUMMARY 53

Automotive Industry Overpricing 53

45 Introduction 54

46 Authors Background 54

47 Scope 54

48 referenced documents 54

49 Submission 55

50 New Directions of Policy 55

51 SIGNIFICANTLY LOWER END PRICES 55

52 PURCHASING INDEPENDENCE FOR RESELLERS 55

53 ENHANCED INDUSTRY PERFORMANCE 56

54 TAXATION REFORM 56

55 INCREASING ECONOMIC PRODUCTIVITY 56

56 OVERPRICING 57

57 RESELLERS INDEPENDENCE 58

58 INDUSTRY PERFORMANCE 58

59 TAXATION 59

60 Tax Reform Suggestions 60

61 Productivity 60

62 ISSUES 62

63 tariffs 62

64 MARKETS 62

65 Management 63

66 MICROECONOMICS REFORM 63

67 Public Vs Private 64

68 Tertiary Fees 65

69 Sale of Telstra 67

70 Health 67

71 Conclusion 67

Automotive Industry Overpricing 69

Automotive Industry Overpricing 70

Automotive Industry Overpricing 71

Automotive Industry Overpricing 72

Automotive Industry Overpricing 73

Automotive Industry Overpricing 74

72 EXECUTIVE SUMMARY 78

Automotive Industry Overpricing Supplement 79

73 referenced documents 80

74 Submission 81

75 New Directions of Policy 81

76 OVERPRICING 81

77 Benchmarking 81

78 Inputs to the Automotive Industry 90

79 RESELLERS INDEPENDENCE 91

80 INDUSTRY PERFORMANCE 91

81 TAXATION 91

82 Productivity 91

83 ISSUES 92

84 tariffs 92

85 MARKETS 92

86 Management 92

87 MICROECONOMICS REFORM 92

88 Public Vs Private 92

89 Tertiary Fees 92

90 Sale of Telstra 93

91 Health 93

92 ConclusionS 93

93 Recommendations 94

Automotive Industry Overpricing Supplement 96

Automotive Industry Overpricing Supplement 97

Automotive Industry Overpricing Supplement 98

Automotive Industry Overpricing Supplement 99

Automotive Industry Overpricing Supplement 101

Automotive Industry Overpricing Supplement 102



List of ANNEXES


1 EXECUTIVE SUMMARY 6

Australian PAYEs Overtaxed & Overpriced 7

3 Situation Review 8

4 Tax Reform Not a New Tax A New Tax System 8

5 Lower Costs Lower Prices 8

6 Taxing Embedded Taxes 8

7 Exporters Share Cost of Government 9

8 Public Corporations 9

9 Affordability 9

10 GST vs WST 9

11 Tax Limits Established 9

12 PAYES & Transparency 10

13 Price Determines Demand 10

14 Business Entities - Students, PAYE and Pensioners 10

15 GST Is No Panacea 10

16 GST Will Reduce Margins 10

17 Taxation Reform 12

18 Infrastructure and Natural Resources 12

19 CPI & Real Prices 13

20 Governments & Debt 13

21 Governments & Prices 13

22 Governments & Private Sector 13

23 Governments & CPI 14

24 GST vs Company vs Employee Income Tax 14

25 Automotive Industry Submission No. 97 14

26 OverPricing Submission & Presentation 14

27 Benchmarking 16

28 APESMA Publication - Supporting Material 19

Australian PAYEs Overtaxed & Overpriced 19

29 Toyota HI-LUX 19

30 Exchange Rate Comparisons 19

31 Toyota Camry Component Costs 20

32 Wages and Price Comparison 21

33 The Cost of High Specifications 21

34 The Myth of Economy of Scale 21

35 Market Report 22

36 General Economic Data 23

37 Conclusion 24

38 National Competition - Tax Reform Conspiracy 24

39 The role of the media 25

40 Taxation 27

Australian PAYEs Overtaxed & Overpriced 32

41 Mandates 33

Australian PAYEs Overtaxed & Overpriced 36

42 Conclusions 33

43 Recommendations 35

ANNEX B Automotive Industry Overpricing Submission No. 97 44

ANNEX D Automotive Industry Overpricing BenchMarking Supplement 46

44 EXECUTIVE SUMMARY 53

Automotive Industry Overpricing 53

45 Introduction 54

46 Authors Background 54

47 Scope 54

48 referenced documents 54

49 Submission 55

50 New Directions of Policy 55

51 SIGNIFICANTLY LOWER END PRICES 55

52 PURCHASING INDEPENDENCE FOR RESELLERS 55

53 ENHANCED INDUSTRY PERFORMANCE 56

54 TAXATION REFORM 56

55 INCREASING ECONOMIC PRODUCTIVITY 56

56 OVERPRICING 57

57 RESELLERS INDEPENDENCE 58

58 INDUSTRY PERFORMANCE 58

59 TAXATION 59

60 Tax Reform Suggestions 60

61 Productivity 60

62 ISSUES 62

63 tariffs 62

64 MARKETS 62

65 Management 63

66 MICROECONOMICS REFORM 63

67 Public Vs Private 64

68 Tertiary Fees 65

69 Sale of Telstra 67

70 Health 67

71 Conclusion 67

APPENDIX A GM in Australia - Making a Bucket, 28/5/96. 69

Automotive Industry Overpricing 69

APPENDIX B Australian Cars are too Expensive ... And Too Dull, 23/2/96. 70

Automotive Industry Overpricing 70

APPENDIX C Just who is Dumb - And Dumber, 19/2/96. 71

Automotive Industry Overpricing 71

APPENDIX D Private Buyers Needed, 1/8/93. 72

Automotive Industry Overpricing 72

APPENDIX E GST - Why Not For Australia?, 28/2/93. 73

Automotive Industry Overpricing 73

APPENDIX F The Middle Man Profits - While The Rest Suffer, 31/5/96. 74

Automotive Industry Overpricing 74

72 EXECUTIVE SUMMARY 78

Automotive Industry Overpricing Supplement 79

73 referenced documents 80

74 Submission 81

75 New Directions of Policy 81

76 OVERPRICING 81

77 Benchmarking 81

78 Inputs to the Automotive Industry 90

79 RESELLERS INDEPENDENCE 91

80 INDUSTRY PERFORMANCE 91

81 TAXATION 91

82 Productivity 91

83 ISSUES 92

84 tariffs 92

85 MARKETS 92

86 Management 92

87 MICROECONOMICS REFORM 92

88 Public Vs Private 92

89 Tertiary Fees 92

90 Sale of Telstra 93

91 Health 93

92 ConclusionS 93

93 Recommendations 94

APPENDIX A Estimates of Yearly vehicle sales 1972-73 to 1995-96 96

Automotive Industry Overpricing Supplement 96

APPENDIX B Ford Falcon Gl Base Price Movement 1984 - 1996. 97

Automotive Industry Overpricing Supplement 97

APPENDIX C Affordability of Base Model Falcon & Commodore Sedans. 98

Automotive Industry Overpricing Supplement 98

APPENDIX D Supporting Newspaper Clippings. 99

Automotive Industry Overpricing Supplement 99

APPENDIX E Australian Motor vehicle Imports & Exports - 1984-85 to 1994-95. 101

Automotive Industry Overpricing Supplement 101

APPENDIX F Chrysler Jeep Cherokee Vehicle & Options US Pricing 102

Automotive Industry Overpricing Supplement 102





LIST OF TABLES


1 EXECUTIVE SUMMARY 6

Australian PAYEs Overtaxed & Overpriced 7

3 Situation Review 8

4 Tax Reform Not a New Tax A New Tax System 8

5 Lower Costs Lower Prices 8

6 Taxing Embedded Taxes 8

7 Exporters Share Cost of Government 9

8 Public Corporations 9

9 Affordability 9

10 GST vs WST 9

11 Tax Limits Established 9

12 PAYES & Transparency 10

13 Price Determines Demand 10

14 Business Entities - Students, PAYE and Pensioners 10

15 GST Is No Panacea 10

16 GST Will Reduce Margins 10

Table 1 BIG W vs. Harris Scarfe 12

17 Taxation Reform 12

18 Infrastructure and Natural Resources 12

19 CPI & Real Prices 13

20 Governments & Debt 13

21 Governments & Prices 13

22 Governments & Private Sector 13

23 Governments & CPI 14

24 GST vs Company vs Employee Income Tax 14

25 Automotive Industry Submission No. 97 14

26 OverPricing Submission & Presentation 14

27 Benchmarking 16

Table 2 Global Product Benchmarking: United States vs Australia 18

28 APESMA Publication - Supporting Material 19

Australian PAYEs Overtaxed & Overpriced 19

29 Toyota HI-LUX 19

30 Exchange Rate Comparisons 19

31 Toyota Camry Component Costs 20

32 Wages and Price Comparison 21

33 The Cost of High Specifications 21

34 The Myth of Economy of Scale 21

35 Market Report 22

36 General Economic Data 23

37 Conclusion 24

38 National Competition - Tax Reform Conspiracy 24

39 The role of the media 25

Table 3 The Advertiser, “Car prices will dive” 1 August 1998 26

Table 4 The Australian, “Increase less than expected”, 31 July 1998 27

40 Taxation 27

Australian PAYEs Overtaxed & Overpriced 32

Table 5 Comparison of Pre & Post GST Incomes 28

Table 6 Purchase of Falcon Pre-GST 30

Table 7 Purchase of a Falcon - Post GST 31

Table 8 Purchase of a Falcon - Post GST and Manufacturer Increases Prices by 5% 32

41 Mandates 33

Australian PAYEs Overtaxed & Overpriced 36

42 Conclusions 33

43 Recommendations 35

ANNEX B Automotive Industry Overpricing Submission No. 97 44

ANNEX D Automotive Industry Overpricing BenchMarking Supplement 46

44 EXECUTIVE SUMMARY 53

Automotive Industry Overpricing 53

45 Introduction 54

46 Authors Background 54

47 Scope 54

48 referenced documents 54

49 Submission 55

50 New Directions of Policy 55

51 SIGNIFICANTLY LOWER END PRICES 55

52 PURCHASING INDEPENDENCE FOR RESELLERS 55

53 ENHANCED INDUSTRY PERFORMANCE 56

54 TAXATION REFORM 56

55 INCREASING ECONOMIC PRODUCTIVITY 56

56 OVERPRICING 57

Table 1 Car Prices - Australia vs. America 57

57 RESELLERS INDEPENDENCE 58

58 INDUSTRY PERFORMANCE 58

59 TAXATION 59

60 Tax Reform Suggestions 60

61 Productivity 60

Figure 1 The Deming Chain Reaction 61

62 ISSUES 62

63 tariffs 62

64 MARKETS 62

65 Management 63

66 MICROECONOMICS REFORM 63

67 Public Vs Private 64

68 Tertiary Fees 65

69 Sale of Telstra 67

70 Health 67

71 Conclusion 67

APPENDIX A GM in Australia - Making a Bucket, 28/5/96. 69

Automotive Industry Overpricing 69

APPENDIX B Australian Cars are too Expensive ... And Too Dull, 23/2/96. 70

Automotive Industry Overpricing 70

APPENDIX C Just who is Dumb - And Dumber, 19/2/96. 71

Automotive Industry Overpricing 71

APPENDIX D Private Buyers Needed, 1/8/93. 72

Automotive Industry Overpricing 72

APPENDIX E GST - Why Not For Australia?, 28/2/93. 73

Automotive Industry Overpricing 73

APPENDIX F The Middle Man Profits - While The Rest Suffer, 31/5/96. 74

Automotive Industry Overpricing 74

72 EXECUTIVE SUMMARY 78

Automotive Industry Overpricing Supplement 79

73 referenced documents 80

74 Submission 81

75 New Directions of Policy 81

76 OVERPRICING 81

77 Benchmarking 81

Table 1 Affordability - Base Commodore Sedan 82

Table 2 Base Commodore Price vs. Average Imported Car (fob) Value 82

Table 3 Affordability - Base Mazda 626 in America 83

Table 4 Affordability - Base Mazda 626 in Australia 84

Table 5 Av. Value of Imported Passenger Motor Vehicle 1984 & 1988 84

Table 6 Av. Value of US Passenger Vehicle Imports & Exports 1988 & 1994 85

Table 7 Av. Value of US Trucks & Buses Vehicle Imports & Exports 1988 & 1994 86

Table 8 FORD - US/Canada/Australia Affordability Comparison 88

Table 9 Taurus LX - US/Canada/Australia Sales Tax Inclusive Affordability Comparison 89

Table 10 US/Canada/Australia Motor Vehicle Price Comparison 90

78 Inputs to the Automotive Industry 90

79 RESELLERS INDEPENDENCE 91

80 INDUSTRY PERFORMANCE 91

81 TAXATION 91

82 Productivity 91

83 ISSUES 92

84 tariffs 92

85 MARKETS 92

86 Management 92

87 MICROECONOMICS REFORM 92

88 Public Vs Private 92

89 Tertiary Fees 92

90 Sale of Telstra 93

91 Health 93

92 ConclusionS 93

93 Recommendations 94

APPENDIX A Estimates of Yearly vehicle sales 1972-73 to 1995-96 96

Automotive Industry Overpricing Supplement 96

APPENDIX B Ford Falcon Gl Base Price Movement 1984 - 1996. 97

Automotive Industry Overpricing Supplement 97

APPENDIX C Affordability of Base Model Falcon & Commodore Sedans. 98

Automotive Industry Overpricing Supplement 98

APPENDIX D Supporting Newspaper Clippings. 99

Automotive Industry Overpricing Supplement 99

APPENDIX E Australian Motor vehicle Imports & Exports - 1984-85 to 1994-95. 101

Automotive Industry Overpricing Supplement 101

APPENDIX F Chrysler Jeep Cherokee Vehicle & Options US Pricing 102

Automotive Industry Overpricing Supplement 102




Availability to the Public
All of the Annexes and most of the content of this submission contains material that has been previously placed in the public domain. I have no objection to this submission being made available to the public.
Change of E-mail Address
Please note that the authors e-mail address referenced in the referenced documents, JohnCaldecott@compuserve.com is no longer valid and has been changed to jec@camtech.net.au

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