WAYNE SWAN MP
FEDERAL MEMBER FOR LILLEY
WE ALL PAY TAX, WHY SHOULDN’T THEY?
Tax evasion by multinational companies and high wealth individuals has reached epidemic levels. Over the last decade it has been increasingly facilitated through tax havens.
It is no surprise that the Australian Tax Office (ATO) is investigating over 800 high net worth individuals when some of our largest and most respected multinational corporations have been using tax havens to insidiously demolish Australia’s corporate tax base.
There may be legitimate reasons why some individuals and corporations locate their activities in tax havens, but the evidence uncovered through the Senate Inquiry shows that some companies deliberately evade their corporate tax responsibilities through tax havens.
Some of Australia’s largest global companies including BHP Billiton and Rio Tinto, have been exposed for using aggressive transfer pricing activities costing the public billions of dollars in revenue. When global companies, seemingly as respected and large as these, operate in this cavalier way, it compromises the integrity of the social contract and green lights others to follow in their tax avoiding footsteps.
I have highlighted these matters in the Parliament on numerous occasions. Most recently, BHP in responses to a letter from BHP I said:
“BHP, who are part of a wider scourge that has seen billions of dollars in revenue smuggled out of Australia in recent years. Last week, BHP wrote to me in misleading terms, claiming to be a global leader in tax transparency. That letter hides more than it reveals: BHP's aggressive use of transfer pricing and profit shifting through its Singapore tax shield and its continuing denial that its marketing hub was created for tax purposes are both shameful deceptions.”
Wayne Swan - February 22 2016 (http://swanmp.org/News-Media/Speeches/Post/2868/Speech-Constituency-Statement-Tax-Evasion)
The UN and OECD estimate that globally the cost of multinational tax evasion and avoidance amounts to as much as US$240Bn. This figure is conservative.
It is estimated that 8 per cent of the world financial wealth is held in tax havens and since 2009 the amount of money held in tax havens has increased by 25 per cent. Sadly it is clear that increasing numbers of Australian companies and individuals have been involved in the use of tax havens.
In government, Labor cracked down on tax evasion and every step of the way was opposed by the Coalition. Importantly they opposed transparency legislation Labor passed in 2013 which has helped shine a light on the extent of evasion by wealthy individuals and corporates.
When companies fail to pay their fair share, revenue must be found elsewhere – from other businesses and individual taxpayers. The billions extracted are lost from education and health funding forever.
Today’s revelations make a mockery of the government’s intention to cut the corporate income tax rate. With many Australian companies already paying less than 25 cents in the dollar, the case for a cut is absurd.
Tax evasion isn’t just a question of legality; it’s a question of ethics and morality. There is a stark contrast between the esteem in which the Boards of companies engaging in tax evasion expect to be held and their actual behaviour.
The revelations today need to be part of a more substantial debate of how rampant tax evasion sabotages our economy and why progressive taxation is critical to securing rising living standards for all.
Hard working Australians pay their taxes, why shouldn’t large corporates and high net worth individuals?
Previous speeches and articles on tax evasion: