Wayne Swan (Lilley, Australian Labor Party) Share this | Link to this | Hansard source

This Liberal-National government is the best friend multinational tax avoiders have ever had. The contrast here with Labor's record in government could not be starker. Labor has a proud record of addressing corporate tax avoidance. While in government, in the 2013-14 budget we included an integrity package to address the erosion of the corporate tax base that would have yielded $1.4 billion over the forward estimates. The budget dedicated $109 million to help the ATO target foreign marketing hubs, counter aggressive tax structures and close a range of loopholes which have facilitated profit shifting by multinationals. In addition, we passed a bill in 2013 which closed loopholes in transfer pricing rules in order to counter tax avoidance and multinational profit shifting. The coalition voted against every single one of those initiatives. This followed the coalition's attempts to block Labor's 2012 cross-border transfer pricing bill, which sought to wind back multinationals' overvaluation of assets in international transactions.

The coalition's record very clearly spells out the extent of their reluctance to stop multinational tax evasion and minimisation. We can see the roots of the current multinational tax evasion bonanza as far back as the Howard and Costello years. They introduced complex tax legislation which opened loopholes that mining companies, banks and other large businesses exploited, to the disadvantage of taxpaying domestic firms, and at the expense of the efficiency, equity and sustainability of the tax system. Since taking office in 2013, this Liberal-National government has remained frozen on its G20 obligations, having paid lip service to only four out of the 15 actions on the OECD's action plan. Australia will be lucky to have implemented even one of the plan's 15 recommendations. Australia's progress in closing loopholes—get this—is slower than that of Bermuda and the Cayman Islands.

The coalition government's deliberate avoidance of tax avoidance betrays the true meaning of the commitment that Mr Hockey and Mr Abbott made of being open for business. They are certainly open for multinational tax avoiders; we are absolutely certain of that. Since taking office, the coalition has rejected Labor's proposals to tackle multinational tax avoidance, which would net the government $1.1 billion. They have sacked 4,700 staff from the ATO. In the same week as the Senate inquiry into corporate tax avoidance handed down its recommendations for closing loopholes, the Abbott government introduced into the House of Representatives a bill that would shield almost half of Australia's top 2,000 companies from having to report the tax that they pay.

Faced with the difficulty of identifying multinational tax avoidance, some governments are now taking the legislative low road and are instead saying, 'Don't worry about that; let them walk away from their obligations. Let's just jack up a regressive GST on all of the punters who work hard, on all of the farmers out there and all of those people who make this country great. Why don't we tax them more?'—just because they are reluctant to actually tax multinational companies.

The argument goes that the GST is relatively easy to collect and those who are disadvantaged can be compensated by adjusting income taxes. The GST hits everybody, but its incidence is particularly acute for households on low and fixed incomes. Historical experience shows that, after compensation is paid to these households, governments collect a lot less taxation revenue than they had anticipate. In fact, the original GST package introduced by Treasurer Costello ended up costing the government $21 billion after compensation was paid. Compensating cuts to personal income tax, indirect taxes and the abolition or reduction of state taxes meant that the government had to spend $1.15 for every dollar raised from the GST when the package was first introduced. Moreover, most of the personal income tax cuts given by Howard and Costello as compensation were simply handing back bracket creep since the tax cuts given by the Keating government in 1995-96. There is no new revenue bonanza from a GST. There is no money left over if you compensate properly for health and education and company tax cuts—none whatsoever.

Often Australia's company tax is deemed a hurdle too high for multinationals, who would rather book profits in more favourable tax jurisdictions. The truth is, whatever the rate, they will be out there trying to avoid it here and around the world. That is why we need fair dinkum international action. (Time expired)