Action Is Needed Over Tax Avoidance, Not Big Talk

That Labor’s corporate tax policy has been so vociferously attacked by the business lobby proves it is on the right track.

The usual suspects, the Business Council of Australia, the Australian Chamber of Commerce and Industry and the Minerals Council of Australia, all emerged on Monday like sprinters out of the starting blocks with their inevitable PR offensive. Any suggestion that big business pay more tax, let alone its fair share, is savaged mercilessly.

Treasurer Joe Hockey had led the charge in Parliament, claiming, typically, that the Opposition’s plan to tighten the thin capitalisation rules would cost jobs. This is pure, unfounded scaremongering. It might be a small first step but at least Labor has a plan, and it is carefully costed.

Contrast this with the government’s sneaky cave-in on Section 25-90 before Christmas, another $600 million gift to multinational tax avoiders. Overturning these tax breaks on foreign debt was a Labor initiative too, quashed by a craven government keen to curry favour with the business lobby.

Sadly, this latest fury over the thin cap rules plays straight into the hands of the corporate tax fraternity. The debate has been confined to a political barney over relatively small and highly complex tax issues. We, too, were highly critical of Labor’s policy this week, but for not doing enough. At least they are doing something. They deserve points for that.

If the business lobby were acting in the national interest rather than the narrow interests of some of its major funders, it would show leadership by splintering on the issue of tax. This is not a level playing field. Those who don’t shift profits though Singapore or the Cayman Islands are at a disadvantage to those who do. Those companies who pay their fair share ought to distance themselves from the big avoiders.

If any proof were required of the hollow rhetoric on the subject of multinational tax avoidance by the business lobby, look no further than the various peak body submissions to the upcoming corporate tax inquiry. We have dealt with the BCA submission, which is weak.

However, the submission from the Minerals Council of Australia is far worse. As a manifesto in sheer manipulation, it warrants examination.

This news story is reprinted from www.smh.com.au

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