ARE THE PANAMA PAPERS JUST THE TIP OF AUSTRALIA'S TAX AVOIDANCE ICEBERG?
Are It pays to pay attention to Senate Committees now and then, because they have a habit of asking public servants difficult questions from which we learn interesting things about Government claims. The recent Senate Economic Committee hearing was an excellent example, when Australian Tax Office officials (some of the few remaining after the Government slashed 4,700 tax office jobs) effectively dismissed out-of-hand the Prime Minister's exaggeration that Australia is 'leading the charge' on tax avoidance.
Tax Office Deputy Commissioner Mark Konza would allow only that Australia has been part of the OECD's "leadership group on tax avoidance" but demurred at the notion that Australia was "leading". Of course, this news wasn't new -- Australia has been part of this group for some years, under this and previous Governments -- but what the hearings did reveal is that the Australian involvement in the "Panama Papers" tax secrecy network might just be the tiny tip of an enormous iceberg.
At least 800 Australians have been linked with the Panamanian firm Mossack Fonseca, and there could be many more. And this firm is just one of a multitude of similar firms operating similar tax secrecy networks in similar jurisdictions to Panama. Tax Commissioner Chris Jordan told the Senate Committee that the jurisdictions which the Tax Office was most concerned about included Panama, the British Virgin Islands and the Cayman Islands -- the latter notorious for being the place where many Australians hide their tax liabilities safely out of the Tax Office's reach.
It is only thanks to Labor that this information is coming to light in the Parliament. It was us who established the Senate tax inquiry. We have had a comprehensive plan on the table for more than a year, which will return $7.2 billion in tax to Australia over the next decade by closing debt-deduction loopholes, improving data matching and giving the Tax Office the resources it needs to crack down on corporate profit shifting. We have been setting the agenda on this issue since the Gillard Government, when we announced a multi-billion dollar package cracking down on multinational tax avoidance and unprecedented tax transparency laws. In 2013, the Liberals voted against both of those.
As Shadow Treasurer Chris Bowen made clear, Labor is open to all proposals that make a positive improvement to tax avoidance laws. For instance, the Government could implement our tax plan right now to ensure big multinationals finally pay their fair share, and also pass our Private Members Bill to raise by 50 times penalties for not complying with Australian reporting laws.
Alarm bells must be ringing for the Prime Minister that many more Australians could be entwined in tax secrecy networks. I worry that Malcolm Turnbull is ignoring those alarms and is unable or unwilling to act. We believe tax transparency is critical to improving compliance, but last December the Coalition and the Greens did a deal to water down tax transparency for big private firms. Until its hand was forced by Labor, the Government delayed the introduction of country-by-country reporting, which Commissioner Jordan said yesterday now gives the Tax Office "a lot more information on (tax avoidance) strategies that we've never had before".
We hear those alarms and are working with Australians who have been asking why this Government has been so slow to address tax avoidance, but so quick to defend banks against a royal commission. Every day now, new voices are joining us to condemn the practices that are allowing some companies to avoid paying their fair share of tax. Forty prominent Australians have recently signed an open-letter calling on the Government to stamp out secrecy. We've done the hard work, we're leading the push to tighten Australia's tax net and we're waiting for others to follow. We don't need to wait, as we learnt in the Senate Committee, because there are actions we can take today. Only Labor stands ready to take them.
Andrew Leigh is the shadow assistant treasurer and Member for Fraser.
A version of this opinion piece was first published in the Huffington Post on 29 April 2016.