A Parliamentary Budget Office analysis report suggests that cracking down on multinational evading taxes could boost the federal budget by $1.1bn over the four-year estimate period, or $4.5bn over 10 years.
The Greens’ leader, Adam Bandt, announced a programme that includes barring very large corporations from claiming a tax break for moving money offshore for the use of intellectual property – a common method for technology and consumer goods companies to send cash out of Australia.
According to the PBO, the Greens’ package, including the cost of transparency measures, would raise $926 million over the forward estimates and $4.48 billion over 10 years.
It adds to the policy that already includes a 40 per cent tax rate for major enterprises making “super profits” and a 6 per cent wealth tax on billionaires. “Right now, one in three big corporations don’t pay any tax,” Mr Bandt said.
“The Greens believe that big corporations making big profits should pay tax. In the balance of power, the Greens will push to make big corporations and billionaires pay their fair share of tax.
“There will be a billionaires’ tax on billionaires’ obscene wealth, which grew faster during the pandemic than the wealth of billionaires in any other country. We will push for a ‘tycoons tax’ on the super-profits made by big corporations,” he added.
He has also proposed tightening the loan deduction rules and charging withholding tax at the highest corporate rate of 30 per cent on payouts from some trusts to offshore beneficiaries.
The Greens also want companies to avoid claiming bad debt deductions where the individual or company owning the money is a related party. They also suggest significantly increasing the penalty for advocating tax evasion, but the PBO claims that this would have minimal impact on the budget.
He described the methods used by multinational corporations to avoid paying taxes in Australia as questionable, but legal.
“One example is ExxonMobil Australia. Over the last six years, it’s booked $56B in total income. But, each and every year, they reduced their taxable income to $0, mostly through a web of deductible payments to other arms of the same company. One of the world’s oil and gas giants has been paying 0 per cent company income tax in Australia.
“These schemes are widely used to avoid or reduce tax in Australia. Apple does it. Santos does it. And Virgin does it. It’s a rort. It’s dodgy. But it’s lawful.”
“We must close the loopholes and stop the cash train departing our country,” he said. “When a nurse is paying more tax than a multinational, something is deeply wrong.”
The Greens Treasury spokesperson, Nick McKim, said tax avoidance was a game too big companies.
“We’re sick of hearing that it’s ‘too hard to tax corporations making billions of dollars here in Australia,” he said.
How the Greens’ multinational tax avoidance crackdown would work
The Greens comprehensive plan to tackle multinational tax avoidance identifies key areas to block the ways that corporations avoid Australian company tax:
- Stop the artificial shifting of debt to Australia to increase tax deductions.
- Stop tax deductions for royalties paid to other arms of the same company.
- Establish a public register of beneficial owners to see who really owns what.
- Publish basic information on the tax paid by companies earning over $50 million.
- Require the ATO to publish the details of the settlement of tax disputes with companies.
- The independent Parliamentary Budget Office has calculated these measures will raise $4.5 billion over the decade. The Greens will also back a global push for a minimum corporate tax rate of 25 per cent.