Big business avoids tax, yet wants to lower rate
One in five corporations with annual profits greater than $100 million paid no tax last year, the Australian Tax Office has revealed.
Michael Cranston, one of the ATO’s deputy commissioners, revealed the figure to a Senate hearing into corporate tax avoidance.
Corporations avoid paying tax by what is euphemistically called profit-shifting. Basically, they move profits overseas to tax havens in places like Singapore, Switzerland, Ireland or Vanuatu. An ATO report last year found that, in 2011-12, more than $60 billion was moved to tax havens.
An Australian Financial Review investigation last year found that Google alone shifted “an estimated $8.9 billion in untaxed profits from its Australian operations to a tax haven structure in Ireland in the last decade”.
The revelations about tax avoidance come as the federal Liberal government pushes to make sure that corporations do not have to disclose publicly what they pay in tax.
The irony abounds. While companies are free to seek tax asylum for their profits, human asylum seekers languish in concentration camps on Manus Island and Nauru. And the government wants to hide both profits and refugees from the public.
A report by the National Centre for Social and Economic Modelling, entitled Living Standard Trends in Australia, estimates that “the gap in the living standards between the richest and poorest grew by around 13 percentage points” over the last decade. And the authors “project a further widening by 10.4 percent over the coming decade”.
To rub salt into the wound, sections of business are pushing to lower the corporate tax rate. At 30 percent, the corporate tax rate in Australia already is one of the lowest in the OECD.
Business has support from the Liberal Party and the ALP. Speaking at the AFR Tax Reform summit, Labor’s shadow treasurer Chris Bowen said: “I would like to see the corporate tax rate come down over time”.