Tuesday, 30 September 2014
Questions without Notice
My question is to the Minister Assisting the Treasurer, Senator Cormann. Is the minister aware of the Who pays for our Commonwealth report by the Tax Justice Network and United Voice, which found that, of Australia's largest 200 companies, 29 per cent have an effective tax rate of 10 per cent or less and 14 per cent have an effective tax rate of zero? If so, given that $8.4 billion more in revenue a year could be raised if companies paid the full tax rate, why is the government targeting the poor, the sick and the young with its cruel budget rather than pursuing the tax avoiders with an aggressive litigation strategy and an adequately resourced tax office?
I thank Senator Milne for that question, and I mean that sincerely because it enables me to address some of the flaws that are in that particular report that I am indeed aware of. Let me just say right up-front: of course, all of us in this chamber, I am sure, would agree that every business that generates profits in Australia should pay their fair share of tax, consistent with the laws of the land. In Australia, we do have one of the toughest anti-avoidance laws in a tax system in the world. That does not mean that we sit on our laws and do not keep on looking at how we need to respond to any emerging issues in the marketplace. Of course we do. And we do have a particular challenge in dealing with the particular issues around businesses that operate in different parts of the world.
The paper that Senator Milne refers to and the reporting of it through Fairfax was a particularly poor contribution to what is a very important debate. For example, Fairfax did not point out that the paper actually shows that Australian companies pay a great deal of tax. Did anyone read in the Fairfax papers that the report by the particular justice network that Senator Milne talks about shows that Australia ranks second-highest in the OECD when it comes to company tax revenue as a share of overall revenue? I do not think so. In fact, the first in that list is Norway. For Norway they include royalty-like revenue from their state owned oil companies. So to compare us is not quite accurate. Furthermore, the paper—and this is where the paper is quite misleading and quite dishonest—focuses on accounting profits and earnings before interest and tax rather than Australia's actual corporate tax base. In Australia, companies are legally and legitimately permitted to make deductions from accounting profits for depreciation, interest, royalties and other expenses. The corporate tax base is what is left after these deductions are made. Incidentally, unions—in particular, the ACTU—have previously argued— (Time expired)
Mr President, I ask a supplementary question. Given the G20 is planning to tackle profit shifting and tax avoidance by multinational corporations, can the minister explain why Australia has pushed back its information-sharing implementation date by one year to 2018 rather than join the 36 countries that are early adopters and are going to start information sharing in 2017?
I thank Senator Milne for her supplementary question. Firstly, I would say that our Treasurer, the Hon. Joe Hockey, is providing great global leadership in resolving this issue. The second point I would make is that Australia right now is already sharing information with about 40 countries around the world. We do think we need to take this further through a common reporting standard, but we are very mindful that, as we implement this, we implement it in a way that is the least distorting of our capacity to continue to grow the economy as strongly as possible here in Australia. By deferring this part of the strategy by one year, we are able to let businesses implement those changes in a more sensible way, minimising the costs they will incur as they make those necessary changes. Let me be very clear: we are totally focused on doing everything we can to ensure that every business, including multinational businesses, making profits here in Australia pay their fair share of tax.
Mr President, I ask a further supplementary question. Is it true that the tax office is piloting a plan to outsource the tax audits of large companies to the very accounting professionals, including the big four accounting firms, that are helping the same companies to minimise their tax? Is this not a conflict of interest?
Let me just make the point here that I was trying to make as part of my response to the initial question. The point that seems to have escaped Senator Milne is that if you look at the tax paid as a proportion of the corporate tax—
Senator Milne, with all due respect, reflected on Australia's four largest tax advice companies.
Senator Milne interjecting—
That is what you did. You reflected on Australia's four largest accounting firms.
The point here is that, unless the Labor Party and the Greens want to change the law and say that we now tax cash flows rather than profits and that we can no longer deduct the business costs, the cost of generating the revenue, before we impose company tax, the assertion that is made is, quite frankly, quite offensive.