A Senate Inquiry into tax avoidance and profit shifting commences this week, with some of Australia’s largest companies due to give evidence about their tax ‘minimisation’ practices.
The Inquiry was initiated by Greens leader, Senator Christine Milne, after a report found that $8 billion in lost revenue was the result of profit shifting by international companies. Public hearings will be held in Sydney, Canberra and Melbourne with corporates including Google, Apple, Microsoft, News Corp, BHP Billiton, Rio Tinto and Fortescue Metals Group expected to give evidence. The inquiry is considering the effectiveness of our current tax laws, the work of the ATO and whether we might benefit from more transparency in order to prevent profit shifting by multinationals. The inquiry will be chaired by Labor senator, Sam Dastyari, who has already criticised the ATO for withholding company documents. The Deputy Chair, Liberal Senator Sean Edwards has commented:
“I think that we’ve got to be careful that we don’t get out of step with what the rest of the global community – and indeed that infers the marketplace – is doing because we could put Australia at a disadvantage.”
Read more at SBS.com.au
Opinion: White-collar crime?
So, when does tax minimisation become profit shifting, become tax avoidance, become illegal? It would seem that it really depends upon who you are. On Saturday Fairfax Media reported that rival publisher, News Limited had ‘siphoned off’ more than $4.5 billion in recent years resulting in an equivalent tax rate of just 10 cents in the dollar on profits.
So how much did you pay in tax last year? 10 cents in the dollar? If you are working full time, probably not. You probably paid a lot more. And if you are retired, you have probably paid 30, 40 or 50 cents in the dollar during your working years. So what’s going on here?
It’s simple really – it’s a rort. Our tax laws are obviously far too easily circumvented. And regulation in the taxation sector is clearly as weak as it is in the financial planning sector, where big companies seem to transgress at will, with barely a rap over the knuckles for what amounts to white collar crime. So the tax rorts are just more of the same and it is hard to believe that an inquiry will come up with sufficient evidence to force change. And it is even harder to believe that the political will exists to reduce such profit shifting, when the Deputy Chair has already stated we shouldn’t get ‘out of step’ with the global community – i.e. we don’t have the nerve to initiate legislation and regulation which brings these corporate pirates back into line. I am not sure of the cost of this Senate Inquiry, but I support its goals. I just hope there are enough members with courage to force some change – for a change.
What do you think? Is $8 billion worth of tax ‘shifting’ a major problem? If so, do you think the Senate Inquiry will uncover sufficient evidence of this practice for the culprits to be revealed and charged? Does any Australian government, of either politcal hue, have the intestinal fortitude and will to take on the Big End of Town, including global giants?
