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.
SENATE TAX INQUIRY GETS UNDERWAY
The Senate Economics Committee is today launching an inquiry into the tax practices of the biggest firms doing business in Australia.
Labor supported this inquiry because we believe Australians deserve to know how much tax big companies are really paying.
We will be using this inquiry to help identify the practices and loopholes that let companies shift profits overseas so that we can work on closing them for good.
Bill Shorten and Labor have already proposed a package of measures to tackle debt deduction arrangements, stop companies double-dipping on tax benefits, and increase resources for the Australian Tax Office.
The Parliamentary Budget Office has confirmed that this package would see multinational corporations pay $1.9 billion more over the next four years.
HARPER REPORT SHARES LABOR’S FOCUS ON THE SHARING ECONOMY
The Harper Competition Review has underlined the importance of re-thinking regulation as new services and competitors emerge in the sharing economy.
Backing Labor’s launch last week of a Discussion Paper on this emerging sector, Professor Harper’s report flags the priority need for reform in areas like taxi licencing, property zoning and product standards.
These are some of the key areas where new services like Uber and AirBNB are disrupting existing rules and regulations.
TUESDAY, 31 MARCH 2015
SUBJECT/S: Tax discussion paper; Harper Competition Review; Martin Ferguson; Liberal sexism
PATRICIA KARVELAS: I'm joined now from Canberra by the Shadow Assistant Treasurer Andrew Leigh and from Melbourne by the Parliamentary Secretary to the Treasurer, Kelly O'Dwyer. Welcome to you both.
KELLY O'DWYER, PARLIAMENTARY SECRETARY TO THE TREASURER: Hi Patricia.
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: G'day Patricia, g'day Kelly.
KARVELAS: To the Treasurer's taxation discussion paper first: there's no prospect of an agreement on GST changes, but possible bipartisan support – I'm hearing noises, Kelly O'Dwyer – on removing tax breaks for superannuation contributions. Am I understanding the noises and the hand-signals right?
O'DWYER: It's only been a day since the paper has been released, so I think it's too early to rule anything out Patricia. I think that one of the key things we want to do with this tax white paper is make sure we have a proper discussion around whether our tax system is currently fit for purpose. We know that in terms of the revenue that is raised at the moment, around 70 per cent in Australia is raised from personal and company income taxes. That compares to just over 30 per cent of our OECD competitors on average. So there's a lot of work for us to do. We know that when it comes to company tax, we've got 800,000 companies in Australia and yet 12 companies pay a third of all those company taxes. There's around 125 taxes that are paid at a state, territory and federal level but of those, just 10 taxes raise 90 per cent of the revenue.
KARVELAS: It seems one area where you could get immediate support from Labor – and you always talk about this lack of bipartisanship – would be the tax breaks at the higher end for super. So why not do it?
O'DWYER: What we're looking at is making it simpler. The long and the short of it is making it simpler, making it fairer and making sure that what we put in place is going to stand the test of time to make us internationally competitive. Because we are in a globally-competitive marketplace right now and we need to be competitive on personal income tax rates and company tax rates. On superannuation...
KARVELAS: Let me just give Andrew Leigh a turn. Or actually, what were you just about to say on superannuation? That you need to reform it?
O'DWYER: On superannuation, we're very interested in seeing what people have to say about the system. We know that there's been some views already put forward. But it can't just be a matter of simply raising taxes, which is what we often hear from those in politics who are very keen to raise taxes. We need to look at how we can also lower taxes - personal income tax rates, company tax rates. Because that is what is going to make us competitive.
KARVELAS: Andrew Leigh, what do you think? I know that Labor supports superannuation reform, but when are you going to consider the GST? You keep saying you're playing the rule-out game on the GST, but so many significant business figures are saying this needs to be looked at. Why isn't Labor prepared to do it?
LEIGH: Patricia, the tax debate is a broad one as Kelly has outlined. We need to make sure that we're looking at where we sit relative to the rest of the world. Our consumption tax is lower than the OECD average, which you've raised; our income taxes on the average worker, low-wage worker and high-wage worker all sit below the OECD average. It's our company tax that sits a little above the OECD average. Chris Bowen has talked in the past about an aspiration to bring that company rate down because ultimately the company tax falls predominantly on workers, and we're able to boost total economic growth if we can get that down. But we also need to make sure we've got equity there. Public finance economists talk about equity, efficiency and simplicity as being the cornerstones of tax reform. When we look at superannuation taxes, we've got the top five per cent of earners getting five times their proportionate share of the superannuation tax concessions. As a nation we're spending $31 billion a year on these tax concessions so we need to make sure that is money that's really as well spent as it can be.
LESS ISN’T MORE ON MULTINATIONAL TAX
Joe Hockey’s only idea for tackling multinational profit shifting is to cut taxes for big multinationals and then cross his fingers they’ll pay them.
The Government’s tax discussion paper clearly states that base erosion and profit shifting pose an increasing risk to Australia’s corporate tax base.
It acknowledges that loopholes and complex offshore structures are letting some big multinationals avoid paying their fair share in Australia.
Despite pointing out the significance of the problem, Joe Hockey’s discussion paper is completely silent on serious ideas to fix it.
This is exactly the kind of backwards priorities we’ve come to expect from a government that handed $1.1 billion back to big multinationals while taking $6,000 a year from some of Australia’s most vulnerable families in its first Budget.