With the Abbott Government refusing to back my push for greater tax transparency, I took to the pages of Business Spectator to make the case for more truth and less 'truthiness' in the debate about multinational tax.
The truth about the government's tax stance, Business Spectator, 2 December 2014
If you want to know how your local school is performing, you can check the My School website for data on its results, funding, enrolments and more. If you want to be sure about a company you’re doing business with, you can search ASIC’s registers for details of its ownership, history and past run-ins with the law. And if you want to find out where to eat out, many states and territories have rated their restaurants for food safety (my favourite is Brisbane City Council, which gives all establishments a star rating).
Transparency is valuable in many contexts because it helps us make more informed decisions — whether as parents, consumers or businesspeople. More sunlight provides a strong incentive for companies, organisations and individuals to do the right thing.
That transparency principle underpins the Private Members Bill I’ve just introduced in the federal parliament. The bill aims to put more information about how much tax multinational companies pay into the public domain. With better information out there on the public record, we’ll be able to have a frank and informed discussion about whether big companies are paying their fair share.
My bill covers companies with total income over $100 million who were required to lodge a return with the Australian Tax Office. It brings forward a reform passed by Labor in our last year of government, under which the tax office is required to start releasing information about these companies’ taxable income, total income and tax paid from the 2013-14 financial year. Under current law, that data is likely to be published in late-2015.
But with the debate over tax fairness brewing in the pages of this newspaper and others, I think we need the information sooner. Talented as Neil Chenoweth is, we can’t leave it to investigative reporters to provide the full picture of how much tax companies pay.
If my bill is passed, individual companies won’t have to do a thing. The tax office will simply compile information it already has from company returns, and publish a table that anyone can access online.
Knowing more about the tax arrangements of major firms is an important step in tackling multinational profit shifting. Throughout this year’s G20 meetings, the need for countries to protect their tax revenue against base erosion and profit shifting has been a consistent theme.
There is also real and valid concern in the Australian community about major firms artificially shrinking their tax bills, leaving the rest of us to pick up the tab.
Yet whenever stories break alleging the world’s biggest firms have dodged the taxman, they are always quick to claim that these reports doesn’t capture the full picture. They might be right, or they might simply be trying to pull the wool.
But we can’t know that unless we have some hard numbers on the record. At present, there is simply no way to find out how much tax private companies pay, or easily compare the reporting of publicly-listed ones.
Right now, the debate resembles what Stephen Colbert famously called ‘truthiness’ – based on what we know intuitively ‘from our gut’. Firms claim that they’re model corporate citizens. Critics allege that the whole system is rotten.
We need a fact-based debate on multinational profit-shifting, and we need it now.
Despite its recent rhetoric on tackling tax avoidance, the Abbott Government has refused to give its support to my transparency bill. Frustratingly, this is entirely consistent with the Liberals’ ‘all talk and no action’ approach to ensuring companies pay their fair share.
At a press conference after the G20 Finance Ministers meeting in Cairns, Joe Hockey told the assembled reporters that: “Supporting greater tax transparency and information exchange is our best weapon to crack down on tax avoidance and evasion right now.”
If he actually believed in making sure companies do the right thing, then supporting my new transparency bill should be a no-brainer.
In recent years the Liberals have also voted against two major Labor bills cracking down on artificial debt loading and transfer pricing. Since taking government, Mr Hockey has scrapped five further tax measures which would have stopped more than $1.1 billion in profits being siphoned offshore.
The political philosopher John Locke once suggested that the actions of men are the best interpreters of their thoughts. In the case of Mr Abbott and Mr Hockey, Locke is absolutely right. Promises and snappy one-liners don’t count for much if you do the wrong thing on the floor of parliament.
The Abbott Government talks a lot about tackling multinational tax avoidance. But is it willing to put the interests of ethical firms before those that are using convoluted structures to avoid paying Australian taxes?
So far, the actions of this government suggest they don’t really think it’s a problem if big companies find artificial ways to pay only tiny amounts of tax. Their actions reveal real beliefs which run counter to their tough rhetoric.
Of course, I’d welcome being wrong about this. If the government wants to prove it really does care about ensuring equity and a level playing field in multinational tax, then my transparency bill awaits their backing. More truth. Less truthiness.
This opinion piece was first published in Business Spectator on Tuesday, 2 December 2014.
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