BRINGING THE HIGH FLYERS DOWN TO EARTH
The Canberra Time, 23 February 2019
When Clive Palmer was recently revealed to have registered his Cessna Citation X in the Cayman Islands, sources close to the billionaire said that it was for three reasons: ‘for tax benefits and cheaper operational and maintenance costs’.
The idea that Palmer can save money by getting his jet serviced in a small island 15,000 kilometres away is, frankly, ludicrous. Indeed, his $4 million plane may never even have touched down there. But the Caymans charges no taxes, and is notoriously uncooperative with other governments - which is helpful when your creditors are chasing you for hundreds of millions of dollars.
Those who choose to use tax havens are mixing it with a group of characters that make the bar-room scene in Star Wars look like a church picnic. As recent leaks have revealed, tax havens are used by drug dealers and extortionists, kidnappers and kleptocrats. Many have just a virtual presence - one building in the Caymans is home to 18,000 companies. Others visit occasionally, just to ensure that the lawyers are keeping their affairs secret and untaxed. According to one estimate, four out of every five dollars in tax havens are there in breach of other countries’ tax laws.
In Australia, tax haven users have gotten the green light from the Coalition government. Guess which country’s companies were the biggest buyers of Australian farmland in 2017-18? It was the Bahamas, whose firms bought 2 million hectares in a single year. To put this into perspective, Bahamas companies last year bought an area the size of Israel. The Bahamas is now the fifth-largest owner of Australian agricultural land. It’s not because there’s a special relationship between our farms and theirs, but because investing through a tax haven is the economic equivalent of donning a wig and fake glasses.
To see why troublemakers love tax havens, take the case of Nevis. The Caribbean island doesn’t require companies to keep any financial documents in the territory. Companies don’t need to be audited. Because doesn’t recognise foreign court judgments, anyone trying to claim assets in Nevis must bring suit in the nation’s courts, which requires posting a US$100,000 bond. Companies pay no tax. As Oliver Bullough puts it in his new book Moneyland, ‘the island is more than a tax haven. It is an everything haven’. Did I mention that Nevis has more companies than citizens?
We need to get tough on tax havens. Under a Shorten government, if listed firms are doing business in a tax haven, they will have to inform their shareholders as a material tax risk. Companies applying for a government tender will have to disclose their country of tax domicile. We’ll work with superannuation firms to devise appropriate guidelines for tax haven investments. We’ll create a register that shows who really owns our firms, and publish country-by-country data on tax paid. Oh, and for investors who now claim a tax deduction for travelling to tax havens, the days of getting an automatic refund for checking on your tax lurks are over.
Cracking down on tax havens and multinational tax avoidance isn’t just a matter of social justice – it’s also how we’re raising money to invest in the future. Among our many positive promises, is a plan to extend preschool to three year-olds, as nations like France, Ireland and China already do. That will benefit 340,000 Australian children, with the largest improvements in disadvantaged areas.
At the next election, Australia will face a choice: do we want to have the biggest tax lurks or the best prepared three year-olds? Do we choose the Bahamas or Belconnen? And will we let tax havens keep flying under the radar, or tell them that their joyride is over? Because in the end, you can support tax havens – or you can improve public services. But you can’t do both.
Andrew Leigh is the Shadow Assistant Treasurer, and his website is www.andrewleigh.com.
Authorised by Noah Carroll, ALP, Canberra.