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Letters to the Editor

From time to time, a commentary on the world will bubble up inside of me to the extent that I'm forced to write a letter to my local, metropolitan, daily newspaper, The Age. This is where I blow of some steam. Feel like venting too? Add your own comment or visit my homepage.

Tuesday, September 07, 2004

Blue-chip Donors

I appreciate Phil Dye's (4/9) sentiments: it would be great if the blue-chips kicked in a billion dollars. But, on reflection, it just doesn't make sense - economically or politically.

If 5% of company net profits are better spent on social services, why not increase the company tax rate by 5%? Surely governments are more efficient at allocating resources due to their expertise, experience and economies of scale? Not to mention, they're fairer and won't focus on things that just interest boards of directors. Plus if all companies contribute, you'd only have to raise it by 3% or 4%.

Sadly, the political reality is that the voters won't stand for a tax hike, even on the corporate rate, because many of them are shareholders (perhaps through their super funds). So why would these same people be happy for their dividends to be redirected to the Board's pet projects? Surely if the voters (comprising shareholders and people who benefit from social programs) can't agree to it, then there's no way shareholders by themselves will. And if a board tries to bully it through, they'll be replaced.

This suggestion is premised on two notions: firstly, that organisations that happen to be good at mining and retail are somehow imbued with the ability to out-perform governments in delivering social services; secondly, that investors will agree to a voluntary levy for the board's projects instead of paying it to the government as a tax, or making their own donation decisions.

While both may hold true for some people for a while, it doesn't make for a sustainable basis for funding important social programs.


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