Anger builds over Multinationals' tax avoidance

Written by: on

by Max O
The recent Senate parliamentary committee hearing into corporate tax avoidance has generated a lot of anger and will inflame opposition to the coming Federal government's budget and the treasurer's tax 'discussion' paper. The working and under class have received an excellent education with the latest revelations about the rorts of the rich and corporations.

They have learned how the rich use superannuation as vehicle to stash away their assets to evade tax on their income; how big business manipulates capital gains tax concessions and negative gearing to reduce their profits on paper and so reduce their tax bill; and now have become aware that the world's largest corporations use of profit tax shifting so as to pay next to no tax.

News that has come out from the Senate hearing's into corporate tax avoidance has been staggering in terms of the contempt and arrogance shown by the giant corporations, who have basically refused to cooperate and answer questions about how much of their profits they have siphoned away to tax havens.

Corporate defiance over tax
Google, Apple and Microsoft's supercilious attitude to questions from the Senate committee has become the hallmark of corporations who followed. Maile Carnegie a Google executive asserted: “We are not opposed to paying tax. We are opposed to being uncompetitive.” Then she argued that Australia is way behind company tax rates of other countries, such as: Bermuda—0% , Singapore—17% , South Korea—24% , Ireland—12.5% , UK—20%.

Tony King, Apple's Australian managing director, played difficult when confronted with the question from Senator Xenophon: "Of the $6 billion that Apple earned in revenue in Australia how much of that went overseas?" He garbled the following replies: "We report all of our revenues and all our costs." We, um, our net profit was $250 million." I'll take that question on notice to give you a specific number." Ah, we pay all our products..."

BHP Billiton executives refused to say how much the Australian Tax Office (ATO) thinks it is owed as a result of the way the mining conglomerate routes its profits through their marketing hub in Singapore. They also wouldn't tell how much tax it paid in that country.

The Corporate Tax Association vigorously denied suggestions that their members improperly minimise tax payments, although interestingly some of its own executives work for companies that have legal disputes with the ATO. This association submitted to the Senate inquiry that it, "...objects to views that paint a picture that the Australian corporate system is fundamentally flawed and that corporate taxpayers in Australia are inappropriately minimising their tax bills."

Chris Vanderkley, treasurer of the association, who works for GE Corporate GE Capital saw his company settle a legal battle with the ATO for over $144 million of tax deductions before it got to court, in January this year.

Within the ATO itself the Senate hearing has heard of a 'comfortable' relationship with four major accountancy firms (Pricewaterhouse Coopers, KPMG, Ernst and Young, and Deloitte Touche Tohmatsu) that advise companies on tax issues. Pricewaterhouse Coopers employed a former senior ATO official soon after that employee oversaw a tax settlement involving one of the company's big 4 bank clients.

The Senate hearing asked the ATO to name some of Australia's worst corporate offenders, unfortunately Chris Jordan from the Commission refused. A strange position to take when the ATO informed the hearing that $60 billion a year is shifted to overseas tax havens. At a minimum, $5 billion a year of taxes is being taken out of the Australian economy.

Class antagonism building
Blind Freddy and his dog can see who is getting all the prosperity out of the Australian economy, it is certainly not the poor and workers.

Treasurer Hockey's tax 'discussion' paper, advocating an increase of the Goods and Services Tax (GST), will further ignite class antagonism against the rich, especially multinational corporations and their operations in Australia. The poor and workers are well aware that all the tax 'lifting' is being done by them and the all the 'leaning' by the rich and big business.

Australian governments since the 1980's have cut the highest income tax rate from 60% to 46.7% and the company tax rate from 46% to 30%. In tandem with this has been the slashing of social services and implementation of the regressive GST, both of which hurt the working and under class.

There has also been some backsliding within the Senate parliamentary committee, with Sam Dastyari in particular being two-faced. It was reported by the Australian Financial Review that he withdrew a formal request for the big 4 banks (ANZ, CBA, NAB and Westpac) and the two largest financial organisations, AMP and Macquarie to front up before the Senate hearing. Bill Shorten and Chris Bowen Labor leadership forced the about-turn as a result of pressure from the powerful finance industry.

It is more than likely that nothing will eventuate from this corporate tax avoidance investigation. The only certainty is that the working and under class have a greater understanding of who pays and who doesn't pay taxes in Australia, and that spells trouble for all present and future capitalist governments.

Print Version - new window Email article

-----