Thursday, April 9, 2015

Tax Avoidance

There are plenty of thought bubbles and kite flying going on about tax, but until the government actually commits to something, it looks for all the world that they’re just playing games and trying to sucker punch the Opposition.

For example we’ve had plenty of discussion about tax avoidance by multinational corporations, and Labor produced a plan a month ago to crack down on the use of hybrid structures and dodgy tax deductions by multinationals that would bring in $1.9 billion over a 1 year period to spend on things like schools and hospitals.

And where was the Government on this? They suddenly went missing in action! So if the government wants some bipartisanship on tax, why not pick that up – that has been costed by the Parliamentary Budget Office.

It is possible to improve the Budget outcome without attacking health, education or pensions. For example we have allowed companies to avoid paying tax on their income. An internal Australian Tax Office memo obtained under Freedom of Information and reported by Heath Aston in The Age ( 4 April 2015, p1) said 10 companies had channelled a combined total of $31.4 billion from Australia to Singapore in the 2011-2012 financial year.

An energy company operating in Australia transferred more than $11 billion to the low-tax jurisdiction of Singapore in that year. In the same year an estimated $60 billion in so-called "related party" transactions went from Australia to tax havens. Energy companies have established "marketing hubs" in Singapore, but their principal purpose appears to be as a destination to shift profits in order to pay less tax.
 
As Mike Steketee wrote recently, “The rising inequality of income and wealth in developed nations has come into sharp focus in recent years but it does not seem to have made its way on to the Government's radar, even though it is the tax system that potentially can play the largest role in influencing the trend”. Since this government lacks the will to address corporate tax avoidance, Labor is taking the lead.

No comments:

Post a Comment