Andrew Leigh

MORE HOLES SHOWING IN JOE’S FLIMSY TAX PACKAGE

The Abbott Government’s rushed and flimsy multinational tax package continues to unravel, with the Law Council of Australia warning Treasurer Joe Hockey not to go ahead with his draft bill.

In a submission on the Exposure Draft of the Government’s proposed changes to Part VI A of the Tax Act, the council has cautioned that the Treasurer’s plan:

“does not accord with, and in many respects derogates from, key design principles for a fair and effective tax and transfer system."  

The Council has highlighted a range of problems with the proposal, including that it will create different levels of taxation for companies carrying out similar business activities, and risks breaching Australia’s existing Double Taxation Agreements. 

So serious are these concerns that the Council has recommended the law not be introduced in its current form.

The Council’s critique follows the recent revelation that the Government prepared no costings for the plan before including it in the 2015 Budget. It cannot say what the fiscal implications of this policy will be because it has literally no idea.

Furthermore, Joe Hockey has been touting the fact that his new law will apply to 30 major multinationals doing business in Australia. But neither he, nor anyone in the Government or the Treasury knows who these 30 companies may be.

The Abbott Government has had more than a year to come up with a sensible, costed plan to tackle multinational profit shifting.

Instead, they have put forward a package that disintegrates upon contact with common sense.

Months before the Budget, Labor put forward a fully costed package of multinational tax measures that will protect $7.2 billion in revenue over the coming decade.

We put in the hard work of developing a rigorous, careful package because we are serious about ensuring big multinationals pay their fair share.

Fixing this problem requires more than bluster and half-formed ideas. But so far that is all this Government is offering.

Joe Hockey needs to head back to Treasury and come up a tax plan that will really tackle multinational profit shifting. Adopting Labor’s package should be priority number one when he does.      

FRIDAY, 19 JUNE 2015

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