Corporate money shifted to tax havens is costing the Australian economy and hurting citizens. Photo: Flickr/ Rod Bodden
For most Australians the sunny shores of corporate tax havens may seem far removed from everyday life, but a new report by the Tax Justice Network has revealed the huge social impact corporate tax evasion has on Australians.
The report, Who Pays for Our Common Wealth?, found over the past nine years Australia’s tax revenue was shortchanged $80 billion because of tax evasion – a large enough figure to pay of the past two budget deficits.
Mark Zirnsak of the Tax Justice Network says this lost tax revenue affects every aspect of Australian life and politics.
“The cost of [evasion] means fewer services. It means that what we’ve seen (happen) in the latest government budget is more likely, where the government is reducing services to the vulnerable,” Dr Zirnsak told City Journal.
“It’s looking to reduce support to the unemployed; it’s looking to essentially privatise tertiary education through increased fee-paying. Those are outcomes when we don’t collect enough revenue to cover basic services and the essential needs of our society.”
The report found a third of the top 200 ASX companies have a tax rate of 10 per cent or less, and nearly 60 per cent declared offshore tax havens in ‘secrecy jurisdictions’ such as the Cayman Islands.
There is also significant evidence many of Australia’s richest multinationals and international companies operating in Australia are using debt as a means of profit-dodging and profit-shifting.
“The report shows is that there are certainly sign of great concern to us about the risks that some of Australians largest companies may be involved in tax dodging activities,” Dr Zirnsak said.
“Because of the level of secrecy involved in Australia’s tax laws it is very hard to actually know what’s exactly happening but we looked at uses that may indicate tax aggressiveness.”
Last week federal parliament passed legislation designed to make it harder for companies to artificially load their Australian arms with debt. Debt loading is a common corporate tactic by which companies make subsidiaries in highly taxed countries appear less profitable in order to pay substantially less tax.
It has also been announced that Australian Taxation Office will now automatically exchange tax information with tax organisation across the globe.
Dr Zirnsak believes these steps do not go far enough stop corporate tax evasion, calling on the public to get involved.
“There does need to be the Australian public making it very clear that tax dodging is unacceptable and putting pressure on both the governments and corporations to improve.
“Ultimately, though, it is the government’s responsibility to take steps to fix this.”
Treasurer Joe Hockey plans to address taxation concerns at November’s G20 summit in Brisbane.
