Multinational tax avoidance continues to be a hot topic of discussion across Australia, and this morning I joined John Stanley and Garry Linell on 2UE Mornings to talk about how we can tackle this challenge. Here's the transcript:
WEDNESDAY, 1 OCTOBER 2014
SUBJECT/S: Joe Hockey dragging his feet on multinational profit-shifting; New Senate inquiry
JOHN STANLEY: This is the question that we have been talking about for quite some time. This question of tax and the capacity of the Australian government to get some of these companies, particularly these big companies like Apple and Google to pay their tax.
GARRY LINELL: So we’ve got the big G2O meeting in Brisbane coming up later this year and the Abbott Government has pledged to tackle the issue there. But there are now even more concerns that the Australian tax office is ill equipped to deal with the problems. I mean if you look at the money that’s going missing, it could actually solve all of our budget deficits. Now they are currently in the process of axing about three thousand jobs at the Australian tax office, including most of the international tax experts. Now many of these experts are being poached to work for the big four accounting firms.
STANLEY: Can we just get this straight. We’ve got people, thousands of them who have been trained at public expense in our universities, they’ve gone into the public service, they’ve become tax experts, they work in the tax office, they’re laid off and then they go and work for the big companies that are helping these big international firms avoid their tax.
LINELL: But the best ones are being poached anyway, long before they are being laid off. They are being picked up by both the major companies who want to know how to minimise their tax and the big accounting firms.
STANLEY: Dr Andrew Leigh is the shadow assistant treasurer and he is one the line with us now.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Morning John, morning Gary.
LINELL: Dr Leigh thanks for joining us, it sounds pretty savage doesn’t it? Three thousand staff from the Australian tax office when we’ve got such a big revenue shortfall.
LEIGH: It’s a huge hit to revenue. We had evidence earlier this year to a parliamentary committee which found for every dollar that you take out of enforcement you can lose up to six dollars of tax revenue. So it really is one of those cuts that cuts off your nose to spite your face. Fewer enforcement officers means less tax revenue in the coffers. So it might make a short term saving of a couple of hundred million but you end up costing the budget up to a billion dollars.
LINELL: I know they wanted to make cuts to the public service but why would you axe your international section of the Australian tax office?
LEIGH: It’s bizarre. I think that one of the things that is going on with the Coalition’s cuts to the public service is it’s real ideology coming to the fore rather than good public policy. We know that over the last six years the number of public servants per Australian didn’t go up, it just stayed flat. So cutting back on the public service really takes us back to a level of tax capability that’s below what we had at the end of the Howard years.
LINELL: It’s clear that multinational tax dodgers are a big issue confronting this country, but we’ve also got locally based companies who are employing tax minimisation schemes and some are paying just ten cents and five cents in the dollar. What would Labor do about it because you allowed it to flourish under the previous governments.
LEIGH: Well we put in place a multi-billion dollar package under Wayne Swan and David Bradbury, who’s now taken a senior tax job at the OECD. And that was aimed to tackle some of these techniques that companies use to shift their profits offshore. I thought when the Coalition came to office they would take that package as a starting point and then look at new ways of finding revenue but in fact they wound it right back, they gave an extra billion dollars of tax breaks back to multinational firms. Right at the same time as they were cutting the pension, cutting health and education. They were taking from the battlers and giving to the billionaires.
LINELL: Now minimising your tax is not illegal but it is essentially morally bankrupt, isn’t it?
LEIGH: Look I’m concerned by the behaviour that we see, but fundamentally I think this has to be about making sure that the laws are watertight. At the G2O there is a big conversation about getting this right. I was at the OECD last week and there was a lot of careful analysis coming out of there. But when the rubber hits the road, when you look at actually what this government’s done in terms of revenue, they’ve given back a billion dollars to multinational firms at a time when they are making Aussie mums and dads pay more.
LINELL: So it’s an international problem, what can we do? Do we need a consumer boycott of some of these products by both Apple and Google and others?
LEIGH: I think the most effective way is to just make sure that the laws are stronger. I don’t see why Joe Hockey thinks that he ought to being going soft on multinationals at the same time that he is going hard on pensioners. There are clear measures out there, there are measures that Labor proposed to address debt shifting and the use of offshore banking units. We’ve urged them to move quicker on common reporting standards. So we’ve recommended concrete measures that the government could implement to add around a billion dollars to the government coffers and the government’s saying no to those.
LINELL: I can just ask you a completely separate question because you are a frontbencher there on the Labor Party. Are you embarrassed with the Labor Party supporting this political witch-hunt in the Senate, Clive Palmer setting up a Senate inquiry into the Queensland Government.
LEIGH: Senators can seek an inquiry on anything they want to.
LINELL: Pretty embarrassing isn’t it?
LEIGH: Well our general view is that the Senate is the house of review and Labor doesn’t oppose inquiries proposed by senators if the resources are available. In 2007 the LNP senators initiated an inquiry on the Queensland Government into Traveston Dam.
LINELL: Do you support that then, the Labor Party?
LEIGH: Our view is in general that if the resources are available then we don’t stand in the way of Senate inquires.
LINELL: Right, okay
LEIGH: That’s the philosophy we’re taking here and I’m just making the point that it’s a bit rich for the Coalition to inquire into state government matters in 2007 and then cry foul on this one.
LINELL: Dr Leigh thank you.
LEIGH: Thank you both.
LINELL: Andrew Leigh there the federal assistant treasurer I know it sounds a bit esoteric but we are talking here about a real abuse of the Senate. But what do you make of the idea of cutting back on staff in the tax office?
STANLEY: It just defies logic why you would be doing it right now. Yes they have to make savage cuts to the public service because they have to reduce expenditure there. But to take three thousand people out of the ATO at a time when we are looking billions of dollars being plunged from our shores, I mean it’s just an outrage.
LINELL: And it needs to be fixed.
STANLEY: Well it does, I’m serious about this, this is money going missing that we are paying for, we are paying money because of this.
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