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Feb 28, 2013

A lesson for Gillard and Abbott, from Hannan

Politicians on both sides of the aisle in Australia tend to view the economy in general and business in particular in the same way that locusts view a crop. A sign of this is the way they tend to refer to increased taxes or the dropping of exemptions to taxes as savings, meaning that they feel entitled to most, if not the lot of what is earned here.

Disturbingly, both sides are viewing big business as some sort of milch cow to be exploited at every opportunity. Labor makes this clear with its class warfare rhetoric, while Abbott intends to impose a tax surcharge on the nation’s most productive companies to install the world’s most generous parental leave scheme; up to $75,000 for six months off work after having a child.

The trouble with this type of thinking is that after being ripped off by the state for a certain a while, and after the price reaches a certain stage, business begins to think that it might be better off elsewhere. British Conservative MP Daniel Hannan makes the point here:
 Government forgets that there are huge resources overseas in places like Africa, South America, and Asia. Mining companies are already looking to those areas, and other business that works internationally can make themselves at home in nearly any stable country, especially those with more favourable tax regimes.

Continued application of the tax lash will result in a nation that only hosts the sort of business that is totally reliant on being here serving only local custom to survive.

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