Today I joined Bill Shorten and Chris Bowen in announcing the first of Labor's significant policy plans. Our multinational tax package aims to ensure that all companies doing business in Australia - big and small - pay their fair share. Here's the details:
THE HON BILL SHORTEN MP
LEADER OF THE OPPOSITION
MEMBER FOR MARIBYRNONG
CHRIS BOWEN MP
MEMBER FOR MCMAHON
ANDREW LEIGH MP
SHADOW ASSISTANT TREASURER
SHADOW MINISTER FOR COMPETITION
MEMBER FOR FRASER
BIG MULTINATIONALS TO PAY FAIR SHARE UNDER LABOR
Labor will shut down loopholes which allow big multinational companies to send profits overseas, ensuring they pay their fair share of tax, just like everyone else has to.
Labor’s plan will bring at least $1.9 billion back to Australia in tax from big multinationals over the next four years, according to the Parliamentary Budget Office.
This package includes:
Changes to the arrangements for how multinational companies claim tax deductions
Greater compliance work by the ATO to track down and tackle corporate tax avoidance
Cracking down on multinational companies using hybrid structures to reduce tax
Improved transparency and data matching.
It is not fair that Australians work hard and pay tax while big multinationals get to play by different rules.
It is not fair that Australian businesses are paying more tax in Australia than big multinationals.
Labor's approach includes stronger rules to stop big multinationals from double-dipping on tax exemptions and deductions. It also puts new limits on the amount of debt that companies can claim tax deductions against.
Labor will also boost resources for the Australian Taxation Office to ensure it has enough staff to track down and tackle corporate tax avoidance by multinational companies.
Our tax system shouldn’t get softer the higher it goes. How much tax you pay shouldn’t be decided by how good a lawyer you have.
Labor’s approach has been developed in consultation with multinational tax practitioners, academics, industry and costed by the independent Parliamentary Budget Office.
This approach also draws on the OECD’s global action plans for countering base erosion and profit shifting.
For instance, last year one of the largest companies in the world paid $80 million in Australian tax, on local revenue of just over $6 billion. The local retailer Harvey Norman paid more tax – $89 million – on a quarter of the revenue.
In the last Budget the Liberals handed back more than $1 billion to big multinationals, but cut the pension.
They re-opened the door for big multinationals to avoid paying tax in Australia but put a tax on seeing the doctor.
Under the Liberals big multinationals pay less, while young Australians pay more for a university degree.
That’s not fair, and it shows just how arrogant and out of touch the Liberals are with the cost of living pressures on Australians.
This will not be easy – it is a complex and difficult task. But we need to act decisively to make sure big multinationals start paying their fair share of tax now.
To assist with the implementation and refinement of these measures, Labor will form a Multinational Tax Expert Panel. Labor will use the Expert Panel to ensure that these changes work as intended.
The Shadow Assistant Treasurer will continue to consult on this approach to ensure big multinationals pay their fair share of tax in Australia now, and in the future.
In addition, Labor will continue to consider multinational tax issues such as increased penalties and powers for dealing with tax avoidance and country-by-country reporting.
We will also pursue transparency measures such as those outlined in the Private Member’s Bill currently before the House of Representatives, Tax Laws Amendment (Tax Transparency) Bill 2014.
Labor will work with our international partners in bilateral tax treaties to consider ways to avoid “double no-tax” scenarios.
The fiscal impact of these measures over three years (assuming a 1 July 2015 start date) is a revenue gain of $1.9 billion.
3rd Party Data Matching – early start
Increased ATO Compliance
Bifurcation and Hybrid Mismatch
Worldwide Gearing Ratio