Every day now, new voices are joining Labor to condemn the practices that are allowing some companies to avoid paying their fair share of tax. Labor already has a comprehensive plan to close significant tax loopholes. We’ve had one for more than a year.
Independent costings from the Parliamentary Budget Office have confirmed our plan returns billions to the budget. Implementing that plan will be Labor’s priority in government.
Last December, the Coalition and the Greens did a deal to water down tax transparency for big private firms. Labor believes tax transparency is critical to improving compliance. Tax avoidance undermines confidence and unfairly burdens workers and small businesses who do contribute.
In the 2014 Budget, the Coalition slashed services for the vulnerable. Two years later, they are giving huge tax breaks to the big end of town. At the same time, the Coalition want Australians to believe they are getting tough on multinationals.
In fact, Mr Turnbull is so desperate to give a tax cut to multinationals that he’s planning to define them as small businesses. To understand the multinational tax measures in this year’s budget, you have to go beyond the slogans and pictures to look at the hard numbers.
Last year, Coalition MPs cheered when Tony Abbott told parliament:
“So far the only idea they have come up with is to spend $100 million on the ATO to raise $1 billion. Well, next time they will be telling us to spend $1 billion on the ATO to raise $10 billion. That is the problem. All they can think of is spending more and taxing more. They just cannot help themselves. I actually think that deep down the Leader of the Opposition is better than that, and I would ask him to start demonstrating that now.”
Question Time, 5 March 2015
This Budget does precisely that, claiming that a $679 million investment will raise more than five times as much - $3.7 billion. If this is true, then it must also be the case that the Government’s savage cuts to the Tax Office – axing 4,700 jobs – have cost revenue over the past two years. Promising to restore some of the Tax Office’s funding in this budget is an admission of failure, not a new crackdown on multinationals. It’s too little and too late.
Putting aside their enforcement measures, the Coalition’s multinational tax measures are budgeted to raise just $200 million over the forward estimates – or $650 million if we include the costing they now attribute to last year’s measures.
This falls well short of Labor’s multinational tax package, which raises $1.9 billion over the forward estimates, and $7.2 billion over the decade.
Unlike the Coalition, Labor will close debt deduction loopholes that allow multinationals to siphon money out of Australia. Under our policy, there will be no arbitrary thin capitalisation threshold. Firms will be subject to a worldwide gearing ratio, meaning they can only deduct debt from their Australian operations up to the overall level of debt held by the multinational group.
The difference between Labor and Liberal could not be starker – we'll put people first, while the 2016 Budget has shown Mr Turnbull and the Liberal Party will look after high income earners and multinationals.
Once again it is up to Labor. We will fight this election armed with a comprehensive tax policy that includes a full suite of tax transparency measures. We know we will have to fight this Government every step of the way to make multinationals pay their fair share.
You can read more about Labor’s policies for clamping down on tax avoidance here: http://www.theirfairshare.org.au/ourpolicy