Companies operating out of overseas tax havens should be penalised, whistleblowers financially rewarded and top companies that transfer money offshore publicly named by the tax office, says the Greens’ tax policy for the 2016 election.
The Greens have also called for the restoration of funding cuts to the Australian Tax Office and $400m to pursue multilateral deals to stop multinational tax avoidance.
The issue has been on the election agenda since the Panama Papers were leaked earlier this month. A total of 11.5m documents were made public from Mossack Fonseca, the world’s fourth-biggest offshore law firm.
The Liberal senator Bill Heffernan, who has been a long-time campaigner on the issue, said multinational tax avoidance had the capacity to force citizens to revise their expectations for schools, hospitals and pensions.
“This is a serious issue, which is redefining the sovereignty of the western world,” Heffernan told Guardian Australia.
“The law has been outsmarted by the technology. When it comes to revenue leakage, most are not breaking the law, they are using the law.
“So it is now normal behaviour for big corporations to expect to pay little or no tax and it is reflected in their share price. The Future Fund has companies in tax havens.
“But you can’t deal with it on your own. We have to act on this as a group of nations. Unless something is done, the western world will be redefined in terms of expectations on schools, hospitals and pensions and the end sum will be endemic corruption.”
The Panama revelations have so far led to the resignation of the Icelandic prime minister and have increased pressure on the British prime minister, David Cameron, after it was disclosed that he had invested in an investment fund set up by his father in Panama.
Ramifications continued around the world while tax investigators from 28 different countries convened an urgent meeting in Paris earlier this week in a bid to develop a global strategy on tax avoidance.
The Greens senator Peter Whish-Wilson said taxation was the price of doing business in a “prosperous society” like Australia.
“All businesses need to pay their fair share,” he said. “Australians are sick of multinationals treating taxation as an optional extra. Every dollar they don’t pay means poorer services and infrastructure for us all.”
Whish-Wilson said in 2012 more than 200 businesses operating in Australia conducted internal company transfers to the value of about $83bn between Australia and “secrecy jurisdictions”.
“While some of these may be legitimate it is hard to believe that tax avoidance is not a major factor in many of these transfers,” Whish-Wilson said.
“When a company does business from a jurisdiction that doesn’t share basic tax data with Australia we should have the ability to impose financial costs on that company for doing so. The era for secrecy in corporate tax affairs is over.”
The Greens policy calls for:
- A restoration of staff levels in the ATO to 2013 levels, which would cost $1.6bn according to the Parliamentary Budget Office.
- Penalties for companies operating out of “secrecy” jurisdictions in the form of higher rates of withholding tax on income generated in Australia.
- Publication of the names and financial figures of the top 20 companies that transfer money offshore through inter-related transactions in each financial year.
- The establishment of a high-level legal/accounting tax recovery unit in the ATO.
- The extension of whistleblower protections to private-sector workers and financial rewards for whistleblowers similar to the US False Claims Act, which offers whistleblowers a proportion of reclaimed money that has been stolen or kept from government through avoidance.
- Stronger Australian Securities and Investment Commission powers, including the removal of confidentiality provisions to allow Asic to share information with the ATO without having to notify the affected party.
- Taxing the financial gains made by trusts as if they were companies at the company tax rate of 30%.
- The use of diplomacy to pursue deals with other countries to achieve global reform, including unitary pricing where a company’s taxes are apportioned to the jurisdictions where they derived their income.
Last year Labor released its policy on multinational tax avoidance, which included changes to the thin capitalisation rules, which it claimed would raise $1.9bn over three years.
As treasurer in 2014, Joe Hockey warned that citizens would lose trust in governments that allowed multinationals to avoid tax. The Coalition implemented country-by-country reporting and the current treasurer, Scott Morrison, said the government had raised $400m since then.
But Heffernan said trillions of dollars of tax were avoided around the world and welcomed the Panama Papers as a potential trigger to force governments to act.
“The penny is starting to drop, people are recognising something needs to be done and hopefully Panama is a trigger,” he said.
