Companies have tax questions to answer as working class taxpayers pay more tax than them

Date
    December 27, 2015
    Canberra Times



The list of tax paid by public companies will give the public a more transparent picture about who pays what.

Well done to The Canberra Times for its recent editorial on big business tax avoidance.    

It is good to see some members of the ruling class understand the political ramifications likely to flow from the fact that 38 per cent of the public companies and foreign private companies in the Corporate Tax Transparency Report with turnover greater than $100 million paid no income tax.   

The report will I think make it almost impossible politically for this government to sell its austerity program or its GST "reform" proposals. The mantra that Australia has a spending problem, not a revenue problem, looks hollow in the light of the low tax contribution from big business.


One benefit of the report may be to force companies to be more upfront about their tax affairs. This is certainly warranted for the 579 companies who paid no tax. Some will have an innocent explanation – they made a loss that year or carried forward previous year losses to wipe out any taxable income.

Qantas for example has said, in response to the release of information showing that despite in having gross revenue of $15 billion that it made a loss that year. True enough, but what we want to know is if that was a trading loss as a result of poor market circumstances or a result of playing the tax planning game – or a combination of both.

Even those companies which do pay tax in Australia might need to come forward with an explanation about their tax affairs. For example on the surface it looks good that Apple paid $74 million tax on taxable income of $247 million, a rate of about 29 per cent. However this is on sales of over $6 billion in Australia.

According to Neil Chenoweth in the Australian Financial Review, Apple shifted $8.9 billion in profit from Australia to Ireland over the decade to 2013. Apple here pays a lot of money to related companies in Ireland, a low-tax country, for intellectual property rights. Maybe Apple should tell us about those arrangements.

Google too, after a few years of reports suggesting it had in one year paid only $740,000 tax yet earned more than $2 billion in revenue for Australian sources, seems to have a better story to tell. Closer examination suggests we need more detail from the company.

Google paid $9 million tax in Australia on a taxable income of $90 million. What explains the discrepancy between the statutory company tax rate of 30 per cent and the tax rate of 10 per cent that Google paid in 2013-14?

Foreign tax offsets (tax credits), imputation offsets and research and development offsets might be part of the explanation. That however just raises a question as to whether such offsets (and special deductions and exemptions businesses may get) are good policy.

Google also appears to have "diverted" much of its Australian source income to Singapore. It is easy to do. When Australians contract with Google to put ads on the site, we contract with a Singapore entity. In general terms, under the tax treaty with Singapore, that country then has the taxing rights over that income because it isn't associated with the Australian entity.

There are legitimate legislated ways to reduce tax, including "extra" deductions, exemptions and offsets (credits). The low amount of tax big business pays suggests such legitimate ways which are only legitimate because of government legislation, should be under the spot light too.

Given 60 per cent of the energy and resource companies covered in the report pay no tax – and yes I know the collapse in resource prices and whether a mine is on-stream and exporting its products or not are important factors in this – surely the usefulness of an extra $1.5 billion in deductions, resulting in tax foregone in 2012-13 of $550 million, is open to question?

This Corporate Tax Transparency Report gives us some information but not enough to make informed decisions about who are and who are not the tax avoiders and the tax planners. The onus is now on the companies who pay little or no income tax in the report to explain how that has come about.

If big business wants to win back the trust of working class taxpayers who pay more tax than them, in some cases literally and in many cases as a percentage of their income, then it is time for those companies to explain how it is that their tax contribution is zero or small. After all if they have nothing to hide they should have nothing to fear from telling us their full tax story.   

John Passant is a former assistant commissioner of taxation in the Australian Tax Office.

The report will I think make it almost impossible politically for this government to sell its austerity program or its GST "reform" proposals. The mantra that Australia has a spending problem, not a revenue problem, looks hollow in the light of the low tax contribution from big business.   

There are legitimate legislated ways to reduce tax,

I like the way people just accept this as an answer:

Why are there legitimate ways to reduce tax - why should we have legitimate ways to reduce tax ?

Tax should not be optional for some, we should all pay the level of tax we are meant to pay.

Why should I be able to get out of bed this morning and just decide that I am not going to pay any tax this year ?

Taxation is not meant to be optional but under the current rules in Australia for many it is.

What we see suggested as tax reform is nothing but a formula to get more tax from the little guy while continuing to not tax the people who choose to not contribute.

The majority of tax is paid by stolen from, a minority of taxpayers whether they be individuals or companies.

Dnarever wrote on Dec 28^th, 2015 at 7:53am:


Due to the fact that it's not about reducing tax, it's about accounting for production, trade and operating expenses.  In most companies one of the major expenses is wages.  Company tax s paid on net profit after trade, production & operating costs are deducted.  (as the other Crook thread explained in great length}

If companies were made to pay tax on gross revenues there would be next to no companies doing business in this country and justabout everyone would be unemployed.

Quote:


This statement totally ignores the enterprise, investment and employment that companies provide the economy even by those companies that didn't pay any company tax in that one sample fiscal year. 

It's the ochlocratic class that don't pay enough tax.  That is the problem.  They want someone else, be it, corporate or successful individual, to provide the lion's share for them.  Why?  Because they can.

They vote themselves cash from the public purse and vote so that they don't pay their fair share and to make other people pay for it for them.    That is our flawed democracy.  Our tyranny of the masses.  Our modern day slave trade. 

Companies are the heart of the economy and whinging Leftists are most definitely the cholesterol. 

stunspore wrote on Dec 28^th, 2015 at 12:15pm:


I don't think Swag's argument is wrong

No it is wrong - he looks at tax avoidance and sees legitimate deductions.

Many of these companies structure themselves in a manner and pay consultants huge wages to ensure that they pay virtually no tax.

It costs many millions of dollars for many of these companies to remain tax free year after year.

And don't make the mistake of thinking that the tax consultants pay any tax either.

I re-post the following here, as it is relevant!

perceptions_now wrote on Dec 28^th, 2015 at 1:13pm:

stunspore wrote on Dec 28^th, 2015 at 12:15pm:


It's the same old question (complaint)...... so why would my answer change?

stunspore wrote on Dec 28^th, 2015 at 12:15pm:


Not stronger, just more popular,which is the underlying issue.  Just because it has popular support doesn't mean that it is fair, just or correct.

The majority can vote for a policy to enslave minorities.  It may well have popular support of the majority (for example the Confederate States of America) but that doesn't make the policy "fair, just or correct" 

Think about that, and then apply that thought to progressive taxation. 

Dnarever wrote on Dec 28^th, 2015 at 12:52pm:


Your argument uses the exception rather than the norm.  Undoubtedly there is tax avoidance as an exception.  There is tax avoidance by individuals and corporates.  You have likely avoided tax consciously or unconsciously many times.  There is crime everywhere, welfare fraud, theft, rip offs, collusion, price gouging, black mail, corruption, vote stacking, insider trading but at the end of the day it's the exception not the norm.

This thread is just sensationalism. You can't tell anything from the bottom line.  One has to look (analyse) the financial statements.  That's why there is a tax office with tax gurus. 

perceptions_now wrote on Dec 28^th, 2015 at 1:15pm:




BECAUSE IT ISNT ILLEGAL!!!  WHY must you be the only person in the country that doesn't yet realise that?  Countries around the globe are working together to find a solution to this problem because it will require a global collaboration.

Please try and keep up with the facts!