Over the weekend the G20 Finance Ministers will meet in Cairns to discuss multinational tax and profit shifting. This is an important opportunity for Treasurer Joe Hockey to show that he's serious about making major companies pay their fair share.
THREE TESTS FOR JOE
When Joe Hockey emerges from the G20 Finance Ministers meeting on Sunday, he’ll be full of big talk about multinational profit shifting and tax avoidance.
To date, the Treasurer’s only real action on multinational taxes has been to reopen the loopholes that Labor closed, gifting multinational tax companies tax breaks worth more than $1 billion.
So because we all know that Joe’s bluster dissolves faster than aspirin when any kind of scrutiny is applied, here’s three quick ways to tell if the Treasurer is simply spouting empty rhetoric yet again:
1. It doesn’t add to the budget bottom line
Real measures stopping multinational profit shifting generate additional revenue. If the Treasurer can’t attach a dollar figure to anything he announces, it isn’t a serious attempt to make companies pay their fair share.
In 2013 Labor put forward a multi-billion dollar package of reforms to close tax loopholes and stop profits going offshore. The Coalition has walked away from $1.1 billion worth of that package; any alternative plan should be judged against that yardstick.
2. It doesn’t align with the actions of the leading G20 nations
One of the key issues up for discussion this weekend is the adoption of the Common Reporting Standard for exchanging financial account information.
Joe Hockey claims Australia is leading the way on implementing this. But his proposed timetable currently lags behind the Early Adopter Group of nations which includes major G20 powers like the United Kingdom, Argentina, France, Germany, India, Italy and Mexico.
As current Chair of the G20, Australia should be leading from the front. That means our local plans to tackle tax avoidance should match those of the most forward-looking G20 member states.
3. It doesn’t come with a delivery date
The government has to bring in legislation or regulations to give local effect to any international deals negotiated through the G20.
To date, Joe Hockey’s tactic has been to promise the world in front of the summit cameras but then prevaricate when it comes to doing the hard parliamentary work at home.
If he is serious about cracking down on corporate tax avoidance, any announcement of new measures must come with a timetable for legislating them.
If Joe Hockey’s ‘announceables’ don’t meet these tests, it will be clear sign that he is unwilling or unable to deliver real fairness on multinational tax. Australian taxpayers will be watching.
FRIDAY, 19 SEPTEMBER 2014
MEDIA CONTACTS: JAMES CULLEN 0409 719 879 (BOWEN)
JENNIFER RAYNER 0428 214 856 (LEIGH)