Fifteen reasons not to give multinational companies a tax cut
- The underlying cash balance for the 2016-17 financial year to 31 January 2017 was a deficit of $44,029 million. Net debt is $323,821 million; and Australian Government Securities on Issue is $483,080 million.
- The ATO’s latest corporate tax transparency report showed 36 per cent of large firms had zero tax payable in 2014-15. However, this is a slight improvement on the prior 2013-14 financial year, where it was nearly 38 per cent. The entities covered by the report are public and foreign firms with an income of $100 million or more and companies privately owned by Australian residents with an income of $200 million-plus.
- Of those who do pay tax, almost a third of companies are paying an effective tax rate of about 10 per cent
- In Australia, analysis showed the GDP loss due to profit shifting by multinationals was 0.41 per cent, or in dollar terms, $US6.1 billion a year.
- The ATO has 71 audits under way in the large business area covering 59 multinational corporations. At least seven major multinational audits were expected to come to a head before June 30, four in e-commerce and three in the energy and resource industries. The ATO expects liabilities to total more than $2 billion from these seven companies.
- Bureau of Statistics business indicators data for the December quarter show a massive 20.1 per cent surge in profits over the quarter, while wages fell 0.5 per cent. Since the Liberal government took power in September 2013, real wages have grown by a miserable 0.3%.
- Due to dividend imputation, almost all the benefit from the company tax cut would go to foreign shareholders as Australian shareholders would have to make up the cut with income tax.
- Treasury modelling finds that the level of employment in 20 or 30 years’ time will be just 0.1 per cent higher than otherwise.
- Treasury’s modelling finds that the cut in company tax would cause the level of real GNI to be only 0.6 per cent higher than otherwise “in the long term”. After 20 or 25 or 30 years, the level of real after-tax wages will be 0.4 per cent higher than otherwise.
- Employers have already benefited from the freeze of the superannuation guarantee at 9.5% rather than the legislated incremental increase to 12% by 2019.
- Employers will benefit from cuts to penalty rates.
- Businesses have already avoided tax through instant asset write-offs.
- The Accord traded away the right to negotiate wage increases in return for price restraint and an increase in the “social wage.” We now see those hard won agreements being whittled away.
- The bigger the gap between the company tax rate and the highest income tax rate, the greater the incentive to become a company.
- By value 71 per cent of foreign investment applications come from countries with company tax rates lower than Australia’s rate and by number a large 97 per cent come from countries with company tax rates lower than Australia’s rate.
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