If it wasn’t already clear, Australia has a problem with corporate tax avoidance. Large companies, especially large foreign companies, are adept at avoiding their taxation obligations, meaning many of the world’s biggest companies pay less tax than most individuals pay.
And now Australians have been given a further insight into the tax dodging of the nation’s biggest private companies, courtesy of information released yesterday by the ATO under tax transparency laws.
Almost 100 companies, earning revenue of $47 billion between them, had no tax payable in 2013-14. This is entirely legal — these companies have used our tax laws, which allow extensive opportunities for profit shifting, to reduce their taxable income.
Last year 59% of voters identified large corporations not paying their share of tax as the thing that bothered them most about our tax system — well ahead of the 23% who said they were bothered by the amount of tax they themselves paid. And that view was remarkably consistent across voting groups and income levels. More than three-quarters of voters think multinational companies should be forced to pay a minimum rate of tax on their Australian earnings.
In contrast, the government appears untroubled by tax avoidance — indeed, it fought tooth and nail to prevent yesterday’s information being released. Australians want a fairer tax system — but the Coalition government isn’t listening. Labor is streets ahead of the Coalition on both the policy and politics of this issue, and it has already outlined plans to require multinational corporations to pay more tax.
If the government proceeds with its plan to hand out windfall tax cuts to corporations in the budget, it should expect a backlash.