HAVENS NO MORE
The Canberra Times, 7 May 2022
Measured by revenue, Walmart is the world's biggest company. Yet a few years ago, financial sleuths discovered that it had $76 billion in assets sitting in more than a dozen tax havens.
The kicker: Walmart had zero stores in those tax havens.
Tax havens like the Cayman Islands, Bahamas and Bermuda often have a company tax rate of zero, choosing to get their government revenue from fees and charges instead. That makes them very attractive to multinationals, who have gotten in the habit of setting up artificial structures to shift profits out of countries like Australia and the United States.
If you're a multinational, tax havens are great for business (who doesn't want to pay zero tax?). But it's a different story if you're a local entrepreneur.
Just imagine what Walmart's use of tax havens means for a business owner who'd like to compete against them. They might have a terrific business model, fabulous staff, and a great location.
But it doesn't mean much if you're up against a megafirm that barely pays tax.
That's why Labor has announced our plan to tackle the scourge of tax havens. Working with other advanced countries, we would move to implement the agreement struck between more than 130 countries to set a minimum company tax rate, and allocate profits of the world's biggest technology companies based on where their products and services are sold.
We would also curb the misuse of debt-deductions and payments for intangibles by multinationals. Our plan was developed based on the extensive work that has been done at the OECD (now headed by former Liberal finance minister Mathias Cormann). If we are successful at the next election, we plan to consult extensi
At the heart of Labor's proposals is fairness. We want to level the playing field so that local companies can compete based on the quality of their products and services, not by exploiting tax loopholes. I'm yet to meet an entrepreneur who got into business to find the best tax lurk.
In the many meetings I've had with Australian businesspeople, I'm struck by their passion for the industry, their drive to make the world a better place, and their desire to compete fairly. Tax havens undermine all those values.
When multinationals pay less, you pay more. Shutting down tax havens will allow government to invest more in Medicare, aged care and child care.
Multinationals have an obligation to support the community where their workers and customers live.
The financial cost of tax havens is large and growing. According to tax haven expert Nicholas Shaxson, tax havens collectively cost governments about half a trillion dollars in lost revenue.
The problem is so bad that around two-fifths of multinational profits now pass through tax havens. By curtailing these offshore treasure islands, we can help fund the services that Australians rely on.
ENDS
Authorised by Paul Erickson, ALP, Canberra
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