Toughen up tax for the big end of town, Business Spectator, 20 April
The Australian Parliament is currently deep into an inquiry into corporate tax-dodging. The investigation has been sparked by real concern in the community that some big firms aren’t paying their fair share. That’s not surprising when, in the past few weeks alone, we’ve seen reports about our 900 biggest firms paying an average of only 19c in the dollar in tax, and major multinationals sending billions offshore to Singapore and beyond.
Some of the tax lawyers and accountants who’ve come before the Senate’s hearings have tried to bamboozle with detail about their Byzantine tax structures. But in fact, one of the main methods companies use to shift profits overseas is as simple as lending money from one place to another.
When we think about lending, we tend to imagine a transaction between a bank and borrower who have no relationship with each another. But this is by no means the only way to borrow money, whether as an individual or a business.
Just as you might have borrowed money from your parents to buy your first car, multinational firms often lend cash from one arm of the company to another.
The argument companies make for this is that they know the affairs of their subsidiaries better than a bank does. This generally means one arm of a company can borrow more money at a better rate from another arm than they could from a bank.
MONDAY, 20 APRIL 2015
SUBJECT/S: Budget; Wayne Swan.
STEVE CHASE: Andrew Leigh, good morning.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Good morning, Steve.
CHASE: Do you have any sympathy for Mr Hockey's predicament, his deficit problem, given the prevailing circumstances? We've just heard from Deloitte Access Economics that we've got weak wages growth, we've got poor company profits and all this is undermining the Government's budget plans and we could be headed for a recession?
LEIGH: Steve, I think the Deloitte report paints a concerning picture about the Australian economy. They speak about the U.S. doing a little better than expected, China doing a little worse than expected. But they also make very clear that despite Eric Abetz's claims, wages growth is the lowest it's been in a decade. These are challenging circumstances, but of course, Peter Costello faced an Asian financial crisis and Wayne Swan faced a global financial crisis so, Joe Hockey ought to be able to deal with iron ore prices coming back now to where they were in 2008.
CHASE: Well how is Labor going to contribute to meeting that challenge you've outlined there. Are you going to help the Government in this time of crisis?
LEIGH: We certainly will be. We've put on the table a plan to fairly tax multinationals that returns $7 billion to the budget bottom line over 10 years. We've been leading the debate about superannuation tax concessions. We think it's vital that an Opposition is engaged with these sorts of debates rather than just sniping from the sidelines as we saw for the last few years. If the Government wants to take our multinational tax policy I'm happy to sit down and work it through with them and then we'll vote for it in the Parliament. That would certainly help return the budget to surplus a little speedier than Joe Hockey's so-called quality trajectory.
Why inequality is a feminist issue, Debrief Daily, 19 April
Lilly Ledbetter started work as a supervisor at Goodyear Tire and Rubber plant in Alabama in 1979. She worked there for the next two decades. Towards the end of her time at Goodyear, she began to suspect that she was earning less than her male colleagues. An anonymous note in her mailbox confirmed it. Despite being praised by her bosses, they had given her smaller raises than the men who worked around her.
Over the course of her time at Goodyear, pay discrimination cost Ledbetter more than $200,000 in salary. Worse, because the statute of limitations had passed, she couldn’t recover it. The story led President Barack Obama to sign the Lilly Ledbetter Fair Pay Restoration Act, which guarantees that such a situation cannot recur in the US.
Pay discrimination is often categorised as a ‘women’s issue’, but it goes further than that. Injustice at work undermines the sense of fairness that is fundamental to a healthy workplace. By paying Ledbetter less, Goodyear hurt her financially. But it also failed to live by the principle of equal pay for equal work. Because the Ledbetter family had fewer resources, they all suffered from Lilly’s mistreatment.
Many Australians were left feeling like Lilly Ledbetter a few weeks ago when figures came out that showed the gender pay gap is now at a 20-year high. Among full-time workers, the average male weekly wage is $1559, while the average female wage is $1276. In other words, blokes get an 18.2 percent wage premium every week of the working year.
That premium isn’t simply about the presence of dangly bits. To understand what’s going on, it’s vital to recognise that pay equity for women is interlinked with pay equity across the workforce. The remorseless rise of inequality is the main culprit for the rising gender pay gap.
$41 MILLION HIT TO BELCONNEN FROM IMMIGRATION MOVE
The huge economic cost of moving the Department of Immigration out of Belconnen has been revealed today.
Shifting the department would drain $41 million a year from local shops and cafes, seriously undermining the viability of these businesses.
Modelling from Urbis handed to the Canberra Times shows federal public servants spend about $45 each per workday in the businesses surrounding their workplaces.
With over 4,000 staff currently based at the department’s complex in Belconnen, these workers pour millions into the local economy each year – whether buying coffee, picking up their groceries or getting a quick haircut.
Hockey loses $7.2 billion by refusing to accept Labor's multinational tax plan - Joint Media Release
BILL SHORTEN, CHRIS BOWEN & ANDREW LEIGH
HOCKEY LOSES $7.2 BILLION BY REFUSING TO ACCEPT LABOR’S MULTINATIONAL TAX PLAN
New analysis from the Parliamentary Budget Office shows Labor’s multinational tax package will generate growing revenue beyond the forward estimates, with Labor’s policy now projected to raise $7.2 billion over the next ten years.
Labor’s plan 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.
The package is forecast to raise $1.9 billion over the next four years, but the PBO now forecasts this to grow to $7.2 billion over ten years as loop holes are closed, and a fairer share of tax is paid by multinationals.
Yet with just four weeks left until the Budget, the Treasurer is still refusing to take up Labor’s offer of a detailed briefing on these tax measures. Shadow Treasurer Chris Bowen wrote to Joe Hockey almost a month ago offering to step him through our package, but so far the response has been silence.
FAIRFAX BREAKING POLITICS
MONDAY, 13 APRIL 2015
SUBJECT/S: Budget fairness; multinational taxation; GST distribution
CHRIS HAMMER: Andrew Leigh is Labor's Shadow Assistant Treasurer and he joins us now from his electorate office in Canberra. Good morning.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Good morning, Chris. How are you?
HAMMER: Very well. You've just run the Canberra marathon I believe, how are you feeling?
LEIGH: Feeling good. It was my first marathon, but my father and my grandfather were both marathon runners so it helps to have a little bit in the genes. I was trying to get under three and a half hours and managed to do that so I was happy with myself.
HAMMER: Well done. I see the Finance Minister Mathias Cormann today has been quoted saying the Budget is a marathon and not a sprint, so I guess we might be halfway through the Government's term. The Government's first Budget was all about spending cuts, now the debate has opened up about the revenue side of the Budget. Just in principle, is that a good thing, that Australians are now talking about revenue and not just spending cuts?
LEIGH: Chris, clearly we need to talk about the budget right across the board but what I'm worried about with this Government is that it's not a marathon or a sprint – it’s a boxing match. They seem to be getting into fights with the South Australians, with the Western Australians and with the Australian people through their sheer unwillingness to consider reasonable savings measures. Labor's got our carefully-costed $2 billion plan to see multinationals pay their fair share of tax. The Government won't touch that but at every turn they see them wanting to expand or raise the GST paid by ordinary Australians.
RICHO WITH JANINE PERRETT
WEDNESDAY, 8 MARCH 2015
SUBJECT/S: Senate corporate tax inquiry; multinational profit shifting; ‘Australia tax’ on downloads
JANINE PERRETT: So what did we learn from today's [corporate tax] committee hearings? To discuss these issues I caught up earlier with Shadow Assistant Treasurer Andrew Leigh. Andrew, it was billed as a very big day at the tax inquiry, there was a lot of noise but I don't think it lived up to the great Kerry Packer one. What was the highlight for you today?
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: Janine, I think we learned a good deal about the ways in which various multinationals are going about minimising their tax. The use of marketing hubs, the parking of profits offshore, and the use of debt shifting instruments in order to move profits from higher tax jurisdictions to low or no-tax jurisdictions. All of that points to the broad picture that Labor has been talking about for some time now…
PERRETT: That's the point isn't it, you have been talking about it for some time. That's my point - did we actually learn anything today? Because even reading Michael West's excellent pieces in the Sydney Morning Herald, I've known about the shifting, the hubs; what was new that we actually learned under the guise of the much-heralded Senate inquiry?
LEIGH: Well I think for the aficionados, it was fleshing out much of what we'd been aware of already. But for many Australians the issue of multinational tax fairness is increasingly becoming important. Many Australians are saying: why is it fair that Joe Hockey and Tony Abbott give $1 billion back to multinationals while cutting the wages of the cleaners who clean their offices, and while cutting funding to the states for schools and hospitals?
LIBERALS DIVIDED ON GOOGLE TAX
New divisions are opening up within the Abbott Government about Joe Hockey’s ‘Google tax’, with two Liberals yesterday flagging problems with the Treasurer’s latest thought-bubble.
On Lateline last night, Joe Hockey’s Assistant Treasurer acknowledged that the tax raises problems with international treaties and said Australia should prioritise multilateral action instead:
TONY JONES: So if you brought in a tax that could raise it, could you theoretically start raising money or would there be legal challenges that would stop you from doing it?
JOSH FRYDENBERG: Well there are legal questions to deal with, various treaties that are in place between Australia and other countries. That's why the OECD-G20 route is the best one to go down, because that would lead to a united position on these related issues.
- Lateline, 8 August
Mr Frydenberg’s comments follow Liberal Senator Sean Edwards’ comments at yesterday’s corporate tax inquiry that Australia should not act unilaterally in levying new global taxes.
IS IMMIGRATION AT THE DEPARTURE GATE?
Community anxiety over the future of the Department of Immigration has hit a new high today following reports that Canberra Airport is firming as the preferred location.
The department has been based in Belconnen since the 1970s, and has sustained many of the town centre’s shops and cafes throughout the past four decades.
Immigration Minister Peter Dutton is still refusing to say whether the department’s 4,000 staff will be moved to another location.
This is despite his own deadline for a decision having passed more than a month ago.
JORDAN JOINS GOOGLE TAX CRITICS
Joe Hockey’s Google Tax has yet another critic, with Tax Commissioner Chris Jordan describing it as only a ‘stopgap’ measure for tackling tax avoidance by global tech firms.
The Tax Commissioner is the latest in a string of experts to advise that the Treasurer’s thought-bubble will not solve the problem of big multinationals shifting profits offshore.
The independent Parliamentary Budget Office and tax experts such as KPMG and Minter Ellison have already warned that the Treasurer’s plans would violate Australia’s tax treaties and undermine the OECD’s international effort to build better tax rules.