It was the worst timing since Australian Industry Group head Innes Willox told a ritzy business lunch that Australian IR laws needed fixing because wages were too high at the exact moment the ABS released data showing declining real wages. Yesterday, Business Council of Australia head Jennifer Westacott travelled to Canberra to address a meeting on international taxation, in order to explain that business paid enough tax already and unless businesses were allowed to vet changes agreed by the OECD and G20 to reduce tax avoidance by transnational companies, countries could “splinter international taxation norms.”
“International tax laws should not be an obstacle in the unstoppable evolution of the global economy,” Westacott warned, as if mere puny governments could stop the march of history into a glorious capitalist future in which international capital is free to roam the globe untaxed. Westacott wanted “a broad rather than a narrow view of what’s needed to realise national objectives” — narrow, of course, meaning focused on making transnationals pay as much tax as companies that can’t resort to exploiting tax havens and transfer pricing mechanisms.
And in Westacott’s view, the lack of a balanced debate on tax avoidance could damage community confidence in the tax system:
“Business will not shy away from challenging issues, but any debate must be sensible, well informed and rely on facts and evidence. Not doing so undermines the community’s confidence in the integrity of our tax system and distorts the debate.”
Other people might think that multinational companies getting away with avoiding tax to the tune of billions of dollars while the rest of us have to cough up our full obligation might undermine community confidence in the integrity of the tax system — but not the Business Council. Westacott’s got her eye on the real danger — not hearing enough from business.
Missing from Westacott’s speech was some disclosure: the BCA represents some of the world’s worst tax avoiders, including News Corp, Glencore and Google, as well as the accounting firms that enable their avoidance.
But as Westacott was warning governments not to do too much on tax avoidance, the Australian Financial Review’s Neil Chenoweth was revealing the remarkable extent of tax avoidance via the tax haven of Luxembourg as part of a coordinated series of international stories sourced from leaked PricewaterhouseCoopers Luxembourg documents. The AFR had even carried a teaser for Westacott’s speech in its morning edition, but now the Business Council was looking even more out of touch than usual as the use of Luxembourg by both Australian companies and transnational companies operating in Australia was revealed. Oh, and apropos of nothing, PWC is a member of the BCA.
“Doing nothing would be ‘counter-productive’ to the millions of ordinary individual taxpayers and the hundreds of thousands of companies who pay tax regularly in the old fashioned way.”
Some of the identities of the companies involved were withheld in the material made available, not out of legal concerns, but because detailed exposes will be published in coming weeks. That would explain why there’s one media company in Australia today that has almost entirely ignored the story — even The Guardian, which admits it benefits from the use of tax havens by its parent group, ran hard on the story. But the only reference to the material in News Corp’s publications have been a brief piece of wire copy run when the story broke yesterday and a piece in The Australian (you know, the paper that claims it’s the only outlet that breaks real stories) from Annabel Hepworth, quoting businessman Richard Goyder pre-emptively attacking G20 moves to reduce tax avoidance.
The AFR also ran Goyder’s comments, and its editorial reflected the struggle between its usual pro-business instinct and Chenoweth’s reportage. “We cannot leave this issue open to simplistic analysis of company tax payments like those of the Tax Justice Network and United Voice and sensationalised reporting [by whom — Chenoweth?], which puts even more pressure on politicians and tax officials to take action in counter-productive ways.”
Counter-productive for whom? The tax dodgers and their advisers? Transnational company executives whose bonuses might not be quite so large? Doing nothing would be “counter-productive” to the millions of ordinary individual taxpayers and the hundreds of thousands of companies who pay tax regularly in the old fashioned way. The AFR also complained that our 30% tax rate “affects Australian companies’ ability to compete” (erm, so with whom does Future Fund compete?). As the Amazon example explored in detail today by Chenoweth demonstrates — Amazon claims it made just $1.5 million in Australia last year — competition is indeed an issue. It was tough enough for the now all-but-vanished Australian book retail sector to compete against Amazon. Amazon’s online offering is compelling, its service high quality, its range extraordinary, its prices often a fraction of local sellers. But it’s far tougher when local companies have to pay 30 cents in the dollar in tax while Amazon can make money off Australians and pay just a few cents in tax on each dollar made.
And the AFR does admit that those who minimise their tax payments “to absurdly low levels through legal dodges push more of the burden onto others”. The AFR and the BCA can’t seem to find that tax minimisation stops being about maximising shareholder returns and becomes a rising burden on the rest of the community, the federal and state budgets and on the economy as a whole. International bodies such as the IMF and the OECD know where that line is in terms of the principles involved and the practicalities.
Next week we find out finally if the Abbott government, and particularly Treasurer Joe Hockey, know where the line is drawn when the G20 talks about tax base erosion and global tax minimisation. The Prime Minister would do better to “shirt-front” the European Union on the issue because that’s where the prime enablers of these lurks are based: in Ireland, The Netherlands and Luxembourg.


15 thoughts on “Big business offers guide on how to be out of touch on taxation”
Ken Lambert
November 8, 2014 at 7:42 pmCML
Why don’t we send it to T Abbott and Smokin’ Joe?
The cardinal objection would be that it would put most of the accountancy firms out of business inside 12 months and the ATO would only need 6 people and a couple of $10 calculators to administer Company Tax.
Job losses in useless jobs would be enormous, and in a couple of years all those unemployed would be in productive jobs lifting Australian productivity enormously.
And the clincher argument is that company Tax would then be brought onto the same basis as PAYG Income Tax for Individuals, which is in effect a turnover tax levied at a high rate with exemptions.
Imagine if Individual Income Tax was levied on Individual Profit viz. your income less your expenses ie. your annual surplus or loss. It would collect very little because people would adjust their expenditure to their income if the ATO didn’t get a big slice of their income first through PAYG.
Which is what International Companies are doing through Tax Havens – adjusting their expenses to their Australian Income to make little if any taxable profit in Australia.
Further, when the rest of the OECD or G20 saw what Australia was doing, not long before all agreed to a uniform turnover tax rate so that their revenues could be similarly assured, via global companies paid the same tax globally.
CML… I don’t see how Smokin’ Joe could refuse such a plan and earn the gratitude of Governments everywhere. A nobel prize for Joe for economics would put Joe and the Australian Company Turnover Tax (ACTT) on the global map forever.
ACTT…..even sounds much better than MRRT or the the other Rudd fiasco (F.A.R.T. was it? Failed Australian Resources Tax)??
ACTT!!!…..you B***ards!!!
Bohemian
November 9, 2014 at 2:13 amHere’s their problem. Australian business is not competing with itself. It is competing with the rest of the world and that means the 147 corporations which control 40% of the world’s GDP and the 800 odd corporations which control 75%. Whatever they may think, Australian companies are forced to play a global game of survival which includes competing for shareholders and capital globally as well as sales. This means that they need significant dividends or significant capital gains to continue playing. So regardless of their personal convictions the less tax they pay, the better their chances of continuing to compete. Attacking Australian businesses while the global corporate rustlers go scot free is self-defeating. Welcome to the true meaning of globalism guys! It is a zero sum game where the most powerful get everything – countries, natural resources and the minds of the masses. It’s not being set in place for our good or anyone else’s for that matter other than the very few.
But having got to this point the only way to stop it is to have the nations of the world agree that we’ve all been conned and throw the bums out and that may be impossible with the present global crop of political “compromises”. James Goldsmith predicted all of this in his 1995 book The Trap and in his famous interview with US commentator Charlie Rose around the same time. His famous quote was “why build a car in Detroit when you labour costs are one 43rd in Vietnam?”
And that is what has happened ever since. It started with manufacturing, then technology went west, then it was telephone sales and service and now it is professional services…engineering, architecture even medical services and the like and soon we will receive all our schooling online – that’s right, only the best will be lecturing. The rest will be flippin’ burgers until the robots take those jobs over.
This is a cancer that is removing the human race from the face of the planet and I am not talking about the Third World. This is happening to the whole world! The Europeans are looking around at each other and saying” what is happening to our culture, our history and our way of life! Why are our moral values disappearing into the ether and our lives divorced from any spiritual meaning irrespective of its philosophical underpinnings. And if we resist, the money dries up. And just in case we don’t like it and try to complain we now have are getting a global surveillance system which will soon know when we are changing our mind about what’s for dinner. That is what globalism is bringing – a Hitlerian wet dream. Whistle blowers will be “disappeared” because they will be (and are) painted as terrorists and anybody who isn’t prepared to watch 10 episodes of The Voice on the trot, will be classified as a “resistor” and sent off for re-education. We have been warned. Movies like Network, Brave New World, 1984 and countless others have set out the scenario now being played out before us and if you want to know what Hunger Games is really about just listen to the testimony of some of the witnesses in the Royal Commission into child abuse.
The people who collectively through interlocking directorships own the 800 – 900 major corporations around the world have been quietly taking over the planet and now they pretty much have won. The political game has become so expensive that without their support politics can’t be played, at least not in its present form – you know that “numbnuts” Manichean “blue tie – red tie” political scenario where one side gets in and then gets kicked out but they all do the same thing.
How can this ‘pas de deux’ be stopped when both red tie and blue tie are controlled by the same people. How do the genuine independents with our interests at heart break through?
So, if our corporations don’t play this game then they are going to lose out and will disappear entirely within the next ten years.
If any country thinks it can stop it … lol! It is likely to run along the following lines: be: “no problem – we’ll get the legislation changed!” If that doesn’t work then it will be: “we’ll dry up their money supply and collapse the price of their commodities”(because almost all governments spend more than they receive in taxes). If that doesn’t work “we’ll encourage an internal coup” (Ukraine, Africa and South America) and if that still doesn’t work, “we’ll send in the army” (Ukraine, Libya, Syria, Iraq, Africa and South America – places with lots of natural resources and usually lots of IMF and World Bank “assistance” to keep them in debt). And of course that old standby, a presidential shot to head can also be pretty convincing if the photographs fail to impress.
Only a “global anti-globalism movement” can stop this now – it’s bigger than any country. There isn’t a day goes by where our rights aren’t being diminished in some way either by huge global corporations or global bodies peopled by former employees of those same global corporations. As comedian George Carlin said: “It’s a big club and you and I are not in it!”
Nope, our companies aren’t so much greedy as merely trying to compete to stay in business. The alternative is to have them taken over by those folks I’ve been talking about sooner rather than later.
john armstrong
November 9, 2014 at 9:02 amMy bet? Not a damn thing will change. Abbott, Hockey and Co. are, after all, just the spineless puppets of big business themselves.
Kel Young
November 10, 2014 at 12:30 amJohn A your bet was always 100 to 1 on. In my life I have come to expect nothing from the LNP and I have never been disappointed.
klewso
November 11, 2014 at 9:12 am36.4% turn-out (lower than the 41% of 2010)- you have to go back to ’42 with it’s 33.9% to get a lower “interest rate”?
Less than one person in 5 has decided which party will “govern”?