Senate debates

Monday, 2 March 2015


Corporate Tax Evasion, Corporate Tax Avoidance

4:55 pm

Photo of Christine MilneChristine Milne (Tasmania, Australian Greens) Share this | | Hansard source

I move:

That the Senate take note of the documents.

I rise to respond to the Treasurer's letters in response to two Senate motions, the first of 2 October 2014 and the other of 9 February 2015, concerning both corporate tax evasion and corporate tax avoidance. As you can imagine, the Treasurer is saying, 'No worries—look here! It's all under control. The law is a beautiful thing; it's all being carefully managed and looked after.' Well, it is not.

Australians are absolutely fed up with the fact that the government has gone after ordinary people, making their lives harder, and has let the big end of town completely off the hook. That is what the Senate put forward in those motions, and here we have the Treasurer writing back saying there is no credible evidence to support the Senate resolution that billions in forgone revenue from corporate tax avoidance could be recouped by simply enforcing current laws. He goes on to say that, according to the tax office, most corporates pay the tax they are required to under Australian law. If that is the case, there is a damn sight wrong with the Australian law when it comes to tax avoidance and tax evasion.

I was horrified when looking at the CPSU survey. What they had to say was that, as a result of the cuts to the tax office, getting the big four accounting firms to conduct audits instead of the tax office is a real worry because that is actually a pilot program, known as the external compliance assurance process. It uses a small number of companies earning over $100 million and it could become a permanent feature. Given that PricewaterhouseCoopers was one of the architects of the Luxembourg scheme, it does seem incredible that the tax office would continue to hire them as consultants and pretend that this is a sound proposition.

We have a situation where corporate Australia is not paying its way. It is getting away with avoiding and minimising its tax. There are plenty of things we can do about it beyond Treasurer Joe Hockey standing up at the G20 saying that Australia was going to get serious and then, in the next five minutes, that Australia wanted to delay by 12 months the implementation of laws that would require automatic information exchange to enable international scrutiny of what is going on around the world with multinationals.

In estimates last week I asked why we could not actually require companies by law to declare their subsidiaries, because at the moment those are not obvious when they are moving money—their debts and their profits and so on—around their subsidiaries to avoid paying Australian tax. We also had MYEFO last year; we would all remember that after the Treasurer, Mr Hockey, made a great song-and-dance at the G20 about how he was going to act on tax evasion, he then asked for another year. We did not join the early movers, and then in the MYEFO statement at the end of the year, he said that the government would not be proceeding with anti-avoidance measures and various provisions that had been put in by the Labor government. We have had the Luxembourg scandal; we have had the HSBC scandal; we know that corporates are avoiding their tax. We know, from submissions to the current inquiry of the Senate, that there is very much a culture in Australia of 'if you don't minimise tax, you're mad.'

I am sure everybody remembers Kerry Packer giving evidence to the 1991 House of Representatives committee of inquiry into the Australian print media industry. When he was questioned about his tax payments he said: 'Of course I am minimising my tax. If anybody in this country doesn't minimise their tax, they want their heads read.' That was Kerry Packer, and that is pretty much the culture that you will find with big corporates around Australia.

The Australia Institute in their submission talk about the disparity between corporate tax rates and income tax rates, and they point out that you need to look very carefully at this; because, when you have a significantly higher personal income tax rate than corporate or company tax rate, people are going to set up companies in order to avoid their tax. And that has been a serious issue in countries with a considerable difference between corporate and personal tax rates. Sweden, for example, had a large discrepancy between the top personal marginal tax rate of 55 per cent and its corporate tax rate of 28 per cent. As a result, it developed strong and comprehensive anti avoidance rules, and we have not done the same in Australia. The fact is: our laws have not kept up with the manner in which the big four have— (Time expired)

Question agreed to.