PARLIAMENT HOUSE, CANBERRA
THURSDAY, 17 DECEMBER 2015
SUBJECT/S: Tax paid by $100 million companies; Government in hiding on tax secrecy
ANDREW LEIGH, SHADOW ASSISTANT TREASURER: On Tuesday this week we saw the Government bring down a mini-budget which contained cuts so harsh that even Tony Abbott and Joe Hockey wouldn't countenance them. We saw cuts to aged care; to childcare; to family daycare; we saw cuts to the Federal Police's international deployments; and we saw cuts to Medicare bulk billing.
In bringing down those cuts, Scott Morrison said, "Well, if you don't like these, show us your alternative." Today's release of tax data on Australia's largest firms points to exactly where that alternative might be.
The tax data that has been released today is data the Liberal Party didn't want you to see. The Liberal Party voted against the tax transparency laws when Labor announced them in 2013. Then, when they got into office they tried every excuse to wind them back, including suggesting this would lead to kidnap risk - an explanation described by one tax expert as the stupidest excuse for non-disclosure he'd ever heard.
We FOI'd the submissions that had come in and it turned out that neither the Treasurer nor the Assistant Treasurer's office had received any formal submissions calling for the winding back of tax transparency. That suggests that tax secrecy wasn't something the public were clamouring for, but rather was the sort of idea you'd dream up over the second glass of sherry in the Melbourne Club.
Labor worked with the Senate to reinstate tax transparency, but then in the last few weeks of Parliament Scott Morrison pointed a gun to his own head, saying he wouldn't pass his own multinational tax bill if the Parliament didn't agree to wind back tax transparency. The Greens baulked, and wound back tax transparency for two out of three of the private firms. So when the data on private firms' tax affairs is released next year, two out of three of the firms that would've been in that tax net will have been taken out.
The information we have today, though, does raise significant concerns. We can see that of the thirteen hundred or so economic entities or economic groups that are covered by these tax transparency data, around one in four paid no tax. One in four of our largest firms pay no tax. In certain sectors, it's bigger than that. If you look at foreign owned companies operating in the banking and finance sector, nearly half paid no tax in the year for which they're reporting.
That's why Labor's multinational tax plan is so important. In contrast to the Government's multinational tax plan, which just has asterisks where the revenue estimates should be, Labor's multinational tax plan is grounded in careful work by the OECD. It's costed by the Parliamentary Budget Office to raise more than $7 billion over the course of the next decade. It would make a significant contribution to budget repair, and unlike the Government's 15 per cent GST, it would do so without hurting growth, without hurting household consumption, without driving up inequality, without worsening housing affordability.
Scott Morrison and Malcolm Turnbull are driving on a road to nowhere with their economic management because they're not willing to make the hard decisions. This is a Government that's tough when it comes to taking on the vulnerable but weak when it comes to standing up to the strong. Labor's multinational tax plan deals with hybrid mismatches, gives targeted resources to the Tax Office and closes down debt deduction loopholes that don't have strong economic grounding behind them.
It's time now for Scott Morrison and Malcolm Turnbull to adopt Labor's sensible multinational tax plan. Rather than standing behind tax secrecy, they should instead be in favour of transparency for all companies with total income in excess of $100 million. Malcolm Turnbull needs to come out of hiding today and tell us why he believes tax secrecy is a good thing. He needs to come out and explain why he believes that the burden should fall on low and middle income Australians being slugged by a 15 per cent GST, rather than by asking multinationals to pay their fair share. Happy to take questions.
JOURNALIST: Are there any particular egregious examples you think in the data that's been released by the ATO today?
LEIGH: Well individual companies will need to be accountable for today's figures to their customers and their stakeholders. But I do notice patterns in particular sectors. Foreign owned firms in banking and finance, where nearly half aren't paying tax, are a sector which suggests that the Government can do more to close down loopholes.
JOURNALIST: It seems that a lot of these companies, though, reduce or limit their tax by gearing losses - interest mainly. Would you change that?
LEIGH: Labor believes that what we can do is to look at debt deductions. This is an area the OECD has pointed towards. It's an area where there's no standard approach taken across the advanced world. It's an area where our current debt deduction rules are frankly pretty ad hoc. Labor believes that a single rule - the worldwide gearing ratio - is the right approach to take to debt deductions. We believe making that change would add to the budget bottom line.
JOURNALIST: By how much?
LEIGH: Our estimate is it would do so by nearly $2 billion over the forward estimates, and more than $7 billion over the course of the next decade. Added to Labor's other savings and revenue measures, that amounts to around $70 billion over the course of the next decade in measures that don't make inequality worse, that don't impair growth and don't impair housing affordability.
No more questions? Thanks very much.
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