Monday, 25 June 2018
Taxation Administration Amendment (Corporate Tax Entity Information) Bill 2017; Second Reading
This is a Labor bill introduced by former Senator Gallagher. On 30 May this year the Senate Economics Legislation Committee handed down its final report on corporate tax avoidance, titled Much heat, little light so far. As many experts note, there was a strong emphasis on transparency. Labor has committed to a broad-ranging multinational and tax haven transparency package: mandatory disclosure to shareholders of tax haven exposure; a public beneficial ownership register that includes trusts, a measure that the government has crab walked away from; and public excerpts of country-by-country reports by global firms about how much tax they pay and where.
This bill implements a very specific tax transparency measure. The Taxation Administration Amendment (Corporate Tax Entity Information) Bill 2017 amends the Taxation Administration Act 1953 to require the Commissioner of Taxation to publicly release tax data for large private firms with turnover of $100 million or over. This is as Labor originally legislated in 2013 in the Tax Laws Amendment (2013 Measures No. 2) Bill 2013. Section 3C of the act details the type of income and tax information the Commissioner of Taxation is required to make publicly available annually for corporate entities. The bill addresses a prominent deficiency in the tax transparency regime that arose after amendments were made in 2015 and it brings approximately 600 large companies into the tax transparency regime. The 2013 measure was a significant advance in tax transparency that accompanied and complemented other significant reforms to close tax loopholes used by large companies. Since then, three years of tax data on corporate tax entities has been publicly released—2013-14 through to 2015-16. It has facilitated constructive discussion about corporate taxation in Australia.
Civil society and advocacy groups argue that tax transparency data is a vital tool for oversight, scrutiny and policy debate, but we've also seen a government that hates the idea of tax transparency. We needn't look much further than the highly politicised attack on ABC's Emma Alberici's analysis of tax data to see how fearful the government is. In fact, last year the government coincidentally released the remaining tax transparency data on the day the nation was engrossed in the final passage of the marriage equality bill.
With the notable exception of the government, almost everyone recognises that tax transparency improves behaviour. Large private companies know that they will be held to account for the amount of tax they pay, and that will change behaviour. As originally passed, section 3C was a tax transparency measure that aligned the thresholds for public reporting of public and private corporate entities, basic tax and income information at $100 million. Section 3C was amended in October 2015 to completely remove private companies from public reporting by the new government in the Tax and Superannuation Laws Amendment (Better Targeting the Income Tax Transparency Laws) Bill 2015.
My colleague in the House of Representatives the shadow Assistant Treasurer said, at the time, that the coalition did so after:
… an astro turf campaign, following really, what might have just have been an idea dreamed up after the second sherry in the Melbourne Club …
The Senate has begun the task of restoring the previous tax transparency laws. However, in December 2015, section 3C was amended again to include private companies. This was as part of the debate of the Tax Laws Amendment (Combating Multinational Tax Avoidance) Bill 2015. However, the threshold was $200 million. No genuine policy rationale was given for either the removal of the public reporting requirement for public companies or the restoration of the requirement with a significantly higher threshold. As noted in a Senate Economics Legislation Committee report on the Tax and Superannuation Laws Amendment (Better Targeting the Income Tax Transparency Laws) Bill 2015, the Australian tax office gave evidence during this inquiry that one in five private companies earning over $100 million does not pay any tax. How did we get there?
During the Senate debate about the government's tax laws amendment bill 2015, the Liberals and the Greens engaged in a backroom deal to let Australia's largest private companies continue to avoid tax transparency. The coalition found a new partner in Senator Di Natale's Australian Greens. The Labor Party stood firm, and the Labor Party held to its position to protect tax transparency. At this point I'll note that, despite the outright fabrications of the coalition that we voted against their Multinational Anti-Avoidance Law, Labor only voted against the amendments that came about from the Liberal Party and the Greens political party deal. We took the pledge to restore the original tax threshold to the 2016 election. If the government will not fix this, we will aim to from opposition.
Schedule 1 of this bill amends the Taxation Administration Act 1953. Section 3C details the type of income and tax information the Commissioner of Taxation is required to make publically available annually for corporate entities. This bill amends 3C(1) to align the threshold for private corporate entities with that of public corporate entities by lowering the threshold from $200 million to $100 million. Item 1 section 3C(1) repeals the current wording of section 3C(1) and substitutes it with language that ensures corporate tax entities, including private companies, with total income equal to or exceeding $100 million are subject to public reporting requirements of section 3C. Item 2 clarifies that the amendment made in schedule 1 applies to the 2017-18 income year onwards. I encourage all those who consider themselves friends of transparency to support this bill and help us deliver one of the vital tools for public discussion about the integrity of our tax system.
I would also note that, in a parliamentary sitting period when the wealthiest individuals in this country have been given massive tax cuts by this government and when it is bringing to the Senate this week a bill to give further tax cuts to the big end of town and big corporations, one of the issues that Labor is vitally concerned about is the capacity for this country to provide decent health care, decent education and decent infrastructure facilities across the country. I don't want to see this country being the equivalent of the United States of America. I don't want to see this country get to a position where the disadvantaged cannot get access to decent health care and a decent education, and where the population in general are denied access to decent infrastructure around the country—because that's where we are heading under this government. Under this government, we are heading towards the Americanisation of Australian society, the Americanisation of Australian economics.
We are in a position where we will not have significant funding to make sure that the standard of living that the fair go in this country demands can be dealt with effectively, because of the lack of funding available through the tax system. We are determined to make sure that the fair go in this country stays here. We are determined to make sure that corporations who should be paying tax do pay their tax, and this bill is an important aspect of that.
Transparency is fundamental to the tax system. Transparency is important to make sure that we've got the funds available to fund the necessities of a modern society, and the transparency that we are proposing in this bill is fundamental to that. On that basis, I conclude by saying that this bill should be supported. If the government themselves were ever keen to do anything on transparency, they should support this. They should stop hiding the problems created by the lack of tax being paid by corporations and private companies in this country. They should stop their ideological attack on the tax base of this country. They should make sure that ordinary workers in this country, families in this country and individuals in this country can access decent health care, decent education and decent infrastructure, because, without the money coming in in a fair and balanced way through taxation, this will not happen. So transparency is important, and this bill will provide that transparency.