WHO GOT SCOMO TO DROP TAX LOOPHOLE ACTION?
This morning’s revelations in The Australian that at the last minute Scott Morrison backed away from plans to effectively address tax avoidance by multinational companies have raised further awkward questions about his budget for big business. Why did Scott Morrison get cold feet, and who bullied him into backing down?
Prior to his first budget speech, the Treasurer’s Office was briefing journalists that the Government would be reduce the so-called “safe harbour” level in thin capitalisation rules from 60 per cent of total assets to 50 per cent to cut the amount of debt multinational companies can load into their Australian subsidiaries. In fact, a definition of “thin capitalisation law” still sits abandoned in the glossary of terms for the 2016 budget, published online by Treasury.
But it seems various vested interests managed to get at Scott Morrison by Tuesday night, forcing his hand and ensuring the measure vanished from the budget – along with any real indications that the Government is serious about making multinationals pay their fair share of tax.
The Treasurer wants to talk about his economic plan but is refusing to tell the Australian people which vested interests wrote the plan for him. Considering how the Government has bent over backwards to offer $55 billion tax cuts for big businesses before battlers, it’s easy enough to guess.
While Labor will support the Coalition’s limited new multinational tax measures and their new resources to tax office enforcement, we will keep urging them to go harder and further.
The Coalition’s tax enforcement measures are budgeted to raise $3.7 billion over the forward estimates.
Their multinational tax measures are budgeted to raise just $200 million over the forward estimates – or $650 million if we include the costing they now attribute to last year’s measures. This falls well short of Labor’s multinational tax package, which raises $1.9 billion over the forward estimates, and $7.2 billion over the decade.
Unlike the Coalition, Labor will close debt deduction loopholes that allow multinationals to siphon money out of Australia. Under our policy, there will be no arbitrary thin capitalisation threshold. Firms will be subject to a worldwide gearing ratio, meaning they can only deduct debt from their Australian operations up to the overall level of debt held by the multinational group. Labor has had this policy on the table for more than a year.
The difference between Labor and Liberal could not be starker – Labor will not be bullied.
We'll put people first, while the 2016 Budget proves once and for all that Mr Turnbull and the Liberal Party will look after the top 1 percent and multi billion dollars multinationals
THURSDAY, 5 MAY 2016
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