Shayne Neumann (Blair, Australian Labor Party) Share this | Hansard source

I speak in support of the International Tax Agreements Amendment Bill (No. 1) 2009. This is an important piece of legislation because, according to the Australian Taxation Office in a submission put to the United States Senate Committee on Homeland Security and Government Affairs hearing on 7 July 2008, it has been estimated by the OECD that between US$5 trillion and US$7 trillion is held in tax havens or bank secrecy jurisdictions.

We have the Australian Transaction Reports and Analysis Centre, commonly known as AUSTRAC, in this country and other governmental institutions, including the Australian Taxation Office, that actively engage in tracking money coming in and out of Australia and in fighting tax evasion. Tax evasion irritates my constituents and, I am sure, irritates the constituents of other members of this House. These agreements which the Australian government came to with the British Virgin Islands and the Isle of Man are important, landmark agreements because they are, as the then Assistant Treasurer said in his second reading speech on 19 March, ‘the first two of their type between Australia and low-tax jurisdictions’.

The British Virgin Islands and the Isle of Man were once identified by the OECD as having certain characteristics of tax havens. Tax havens are places where certain taxes are levied at a low rate or not at all. It infuriates and frustrates ordinary taxpayers as well as businesses, companies and other entities in this country to find those people, those entities and those companies engaged in tax evasion. No-one should criticise legitimate tax avoidance and minimisation, but to simply engage in activities which mean that your fellow Australians pay a more disproportionate share of tax than is fair is simply wrong, unethical and immoral—and Australians simply hate it.

The legislation that is before the House relates to the tax information exchange agreements, as I said, that Australia entered into with the British Virgin Islands and the Isle of Man. As the member for Casey said, the agreements were signed in London in October 2008 and January 2009 respectively. With this bill we are effectively inserting the text of those agreements into the International Tax Agreements Act 1953. The outcome is a good one because it means that tax is levied on residency rather than source. It means that people are not double taxed. It also means that tax is actually levied and paid in the country of residence.

There are a number of aspects to the agreement and I am going to refer to those very briefly. It means that Australia, the British Virgin Islands and the Isle of Man will have the sole right to tax salaries they pay to individuals undertaking government functions and administration. It means that payments received by students and business apprentices will be exempt from the country they are visiting. It means that residents count. There are a number of other changes, one including a non-binding administrative mechanism to assist taxpayers to seek any resolution of disputes which may be engaged in concerning the transfer of pricing.

It is important legislation to promote ethical arrangements in respect of tax. It is important in terms of fairness, integrity and justice for Australian taxpayers but also for taxpayers in those other jurisdictions. I know that my constituents take a very adverse approach to those taxpayers who do not pay their fair share. We need to engage in these types of agreements if we want to make an important contribution to battling offshore tax evasion. If we want to participate with other countries in making sure that Australian residents and those residents of other countries pay their tax, we need to engage in these types of agreements and we need to make these agreements part of our law.

We need to make sure that we demonstrate by legislation our ongoing commitment and resolution to prevent harmful tax practices, harmful conduct, which will mean that the integrity of the tax system in this country is diminished. Every dollar that is not levied, every dollar that is not raised by tax, is a dollar that is not spent on a road, on a school, on a hospital, on Medicare or on any other worthy destination for that dollar. I live in the fastest-growing area in South-East Queensland and Queensland. Schools, hospitals, roads and vital infrastructure are simply critical to the sustainable development and ongoing growth of South-East Queensland and the Ipswich and West Moreton area. Making sure we have a tax system that levies every dollar, legitimately and lawfully raised, is simply crucial.

We need to also improve our relationships not just regionally but internationally. These agreements will improve the relationship we have with these other places: the British Virgin Islands and the Isle of Man. We need to improve our cooperation not just with those places but with the South Pacific and with Asia, and particularly with places such as Africa. The government is committed to ensuring that we have integrity in our tax system and that is why the government has so vigorously funded the Australian Taxation Office. I commend the minister for what he said and the commitment of the Rudd Labor government to providing $595.2 million over four years to help businesses remain viable in the face of the global recession and to make sure that we enhance the Australian community’s confidence and support of the Australian taxation system.

The minister said in his press release of 12 May this year that the measures we have undertaken at this very difficult time will mean that we are able to collect an additional net revenue of $1,383.6 million through enhanced compliance with our tax system. We are supporting, across four years, the Australian business community—those four million Australians involved in working in small business, the 1.9 million Australians operating small businesses and other taxpayers—to meet their tax liabilities. The ATO will invest $100.1 million. But it is the tasks we have undertaken to support the multi-agency task force in relation to Project Wickenby to continue our investigation and prosecution of those involved in the abuse of tax havens which are so critical. The government will provide $122 million over three years, starting from 2010-11.

Project Wickenby has had some success, in cooperation with the Taxation Office, the Australian Crime Commission, the Australian Federal Police, the Attorney-General’s Department and AUSTRAC, as well as ASIC and the Commonwealth Director of Prosecutions. I urge the government to expand those kinds of projects to bring greater scrutiny to international transactions to ensure that businesses and individuals do not rort the Australian taxation system. During the year ending 30 June 2009, it is estimated that Project Wickenby raised $230 million in tax liabilities and collected $40 million in cash. In addition, Wickenby collected $159 million in tax in subsequent years from taxpayers who had been subject to Wickenby actions. There are a number of practices it has targeted. We have seen prosecutions, we have seen people subject to criminal investigations and we have seen people charged with indictable offences. We have seen assets restrained under injunctive relief, we have seen tax collected and we have seen, I would argue, greater compliance as a result of the actual operation of Project Wickenby. But we need to do more. We need better cooperation and we need more financing in that regard.

We are a country that is seen as a place where people come. They engage in lawful activity. By far the majority of Australians are law abiding, taxpaying individuals who see taxation as a means of giving back, ensuring that our health and educational systems are sustainable, that our roads are better, that our society is more civilised and that in terms of our economy we are not just a stronger country but a fairer one. That is the purpose of the tax system. If we can ensure by international agreements that that is enhanced, that is a very good thing. These agreements go a long way towards ensuring international cooperation, greater political and administrative partnerships, better arrangements in terms of the transfer of money and tax being paid at its rightful source of residence. I support the bill.

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