Nick Champion (Wakefield, Australian Labor Party) Share this | Hansard source

I rise to support the International Tax Agreements Amendment Bill (No. 1) 2009, which brings into force two recently concluded taxation agreements. The further strengthening of our taxation system is in the interests of all Australians, as it will help ensure that we are all contributing our fair share of tax and meeting our responsibilities to the communities and nation in which we live. Tax is the price we pay for our civilised and prosperous society, and it is part of every citizen’s responsibilities to pay their fair share of tax.

This bill seeks to prevent a small number of would-be nontaxpayers—I suppose you could call them—from evading their responsibilities. The consequence of tax minimisation is to deprive the community of revenue needed to run schools, hospitals, roads, defence and the good workings of government. It also results in PAYG taxpayers—who cannot easily evade tax or set up complex arrangements—shouldering additional burdens. In fact, it appears to be the case that the people who have the capabilities to evade tax though complex diversionary accounts and structures, such as international taxation havens, are often those most capable of meeting their tax responsibilities. They are often people with significant income and assets.

This bill gives the force of law to two taxation agreements, one with the British Virgin Islands and one with the Isle of Man. The agreements were signed in London on 27 October 2008 and 29 January 2009 respectively, and this bill will insert the text of both agreements into the International Tax Agreements Act 1953. This has been an international issue for some time. These agreements achieve two outcomes of importance to the integrity of Australia’s taxation system: firstly, they provide for the sharing of information; and, secondly, they build Australia’s relationship with countries that desire to end the problem of international tax havens, which have been a big problem for a lot of countries for a long time.

Together, these two agreements and the related tax information exchange agreements, TIEAs, support Australia’s efforts to combat tax avoidance and evasion through the establishment of a transparent and effective exchange of information for tax purposes. They will promote fairness and enhance the integrity of Australia’s tax system. The TIEAs provide for full exchange of information on request in both criminal and civil taxation matters and will build upon legislation both here and in the British Virgin Islands and the Isle of Man which provides for mutual legal assistance in criminal matters This is an important component of Australia’s efforts to combat offshore tax evasion.

The agreements have been considered by the Joint Standing Committee on Treaties, which has recommended that binding treaty action be taken. This is necessary because the face of taxation haven abuse is changing and globalisation and the internationalisation of finance and money movements has made international dealings more commonplace. This means that the challenges for Australia are even greater and the challenges for the international community are even greater in responding to this problem.

That is why negotiating taxation information exchange agreements has played an important part in this government’s efforts to combat international taxation evasion. We have pursued international agreements bilaterally, like those being discussed with this bill today, but we have also continued our commitment to the multilateral process. Scandals around international taxation havens have happened in a number of countries. There was a very big one in Britain around the Virgin Islands and the Isle of Man. Very high-income individuals were hiding vast amounts of money in these tax havens. Most interestingly—although they are not subject to this bill—it is also where most international hedge funds are based and these funds, with vast amounts of money, are not subject to any international regulation at all. We think the multilateral process—the G20 meetings of finance ministers and leaders—are incredibly important forums to combat this problem. It is a very big problem. It deprives governments and nation states around the world of valuable revenue, which could be used to do so much good.

As the former Assistant Treasurer has said, it is pleasing to see that Hong Kong, Lichtenstein and Singapore have all agreed to adopt OECD standards of transparency and effective exchange of information for taxation purposes. We certainly wish the government all the best in negotiating effective exchange-of-information arrangements with all of those countries, at the earliest opportunity. Lichtenstein has a particularly bad name on this front for being a haven for tax avoidance.

These TIEAs reflect the shared commitment of Australia, the Isle of Man and the British Virgin Islands to implement the OECD principles of transparency and effective exchange of information to eliminate harmful taxation practices. I look forward to further developments in relation to this as I know that Australia has been at the forefront of global action to enhance tax transparency and information exchange, having demonstrated strong support of these proposals at the finance ministers’ meeting hosted by France and Germany in October 2008.

This complements a strong commitment by this government to international standards on anti-money-laundering and counterterrorism financing, as set by the Financial Action Task Force. I would particularly like to welcome the admission of the British Virgin Islands as a full member of the International Organisation of Securities Commissions, where it joins at least 100 other jurisdictions with recognised high standards of regulation and compliance. These standards are necessary to allow taxation enforcement measures like Project Wickenby—Australia’s inter-agency approach to tax haven abuse—to deliver on its commitments and targets. We certainly hope that the information generated by these agreements will allow those programs to be even more effective and force more tax evaders to face the consequences of their actions. We also hope that they dissuade people who might be tempted to go down this path from putting themselves in a position where they are vulnerable to the force of taxation law.

People who seek to evade the taxation system do present a very serious risk to the integrity and moral foundations of our tax system, and we should do all in our power to meet this challenge. It is very unfair for a truck driver, a shop assistant or someone who cleans this building later on tonight to have to pay their fair share of tax while other people can evade their taxation obligation to this nation. The agreements presented in the bill today will help the government do just that and will support the integrity and fairness of Australia’s taxation system. Australia is committed to the OECD’s Harmful Tax Practices Initiative, which is focused on improving transparency and the exchange of taxation information globally. We are very committed to international efforts to make sure that both our taxation systems and our finance systems are not subject to international chicanery.

This bill reinforces that commitment. It illustrates that this is a government keen to continue improving Australia’s relationship with the British Virgin Islands and the Isle of Man. For these reasons I commend the bill to the House.

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