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New ASIC funding model ‘misguided’

The government’s proposed changes to the funding model for ASIC is not what it seems and would result in “backdoor taxation”, an economist has warned.

In an opinion piece published by Mortgage Business sister title ifa, Dr Patrick Carvalho, research fellow at The Centre for Independent Studies, a Sydney-based think tank and policy institute, has taken the government’s proposed “user pays” ASIC funding model to task, warning it may be an example of “[a wolf] in sheep's clothing”.

“This plan is essentially backdoor taxation,” Dr Carvalho warned. “The sugar-coated proposal to directly charge an industry — as if everyday Australians would be spared any cost — is misguided and opportunistic.

“Although there is nothing wrong with a user-pays system per se, the new proposal does not have checks and balances to future regulatory costs and charges.”

While a user-pays system seems equitable in theory – and in line with the “Australian fairness tradition” – the Brazilian-born economist argued that the proposal seeks to tax the financial services industry while not accounting for increases in compliance costs.

“Any levy, fees or tax on business, no matter how one calls it, is a government-imposed cost that has to be paid either by stakeholders, customers or employees — or a combination of these individuals,” he said.

“Make no mistake: the new ASIC funding model is backdoor taxation, and the ultimate cost will land on unsuspecting taxpayers.”

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