ATO data shows that 36 per cent of large companies paid no tax in the 2014-15 financial year. 679 companies including McDonalds Asia Pacific, Chevron Australia, Vodafone Hutchison and News Corp made $462 billion in revenue in Australia last year without contributing a single cent to the nation’s health, education, defense or welfare.
Of the large companies who did pay tax, the effective tax rate on profits was 25 per cent – 5 per cent below the statutory rate of 30 per cent.
Of the 200 largest corporate taxpayers in Australia, companies in the health care, energy and financial sectors paid the lowest effective tax rates of 19 to 24 per cent on a combined income of over $330 billion.
Investors in Australia assume taxpayers will bail out Australia’s big four banks in the event of any of them becoming insolvent. As a result, investors lending to such large banks are prepared to accept lower returns for risk, which lowers how much banks pay for funding. The Reserve Bank of Australia estimates that Australia’s major banks receive an implicit subsidy worth between $1.9 billion and $3.7 billion due to this assumption.
An international report on G20 subsidies found that the Turnbull government is continuing to subsidise fossil fuel production to the tune of $5.6 billion a year. Nearly $6 billion a year is paid to Australian corporations though the Fuel Tax Credit scheme. In 2014 it was estimated that State Governments alone had paid $17.6 billion in subsidies to mining companies over the previous 6 years.
Oxfam Australia estimates that the Australian economy is losing up to $6 billion a year in tax revenue due to Australian-based multinationals shifting money to international tax havens.
The federal government remains committed to doing bugger all about this problem, but they are pushing ahead with their plans to cut corporate tax rates. This means that while we’ll still be up to $6 billion a year down on revenue, corporate tax avoidance will be a lot less of a problem in Australia, because the less tax you’re meant to pay, the less tax you can avoid paying.
So the government would like to wish big business a happy and prosperous 2017. For the rest of us, they’ve had to made make some cut backs.