PASSWORD RESET

Magazine of Socialist Action in Australia

1 in 5 companies pay no tax!

Reading Time: 3 minutes

Last month the Australian Tax Office (ATO) revealed that more than one in five privately-owned companies with revenue in excess of $100 million paid no tax last year. Many of the corporations on the list are household names.

It has previously been revealed that international corporations like Google, Apple and Uber pay almost no tax in Australia. Now we also know that one third of the top listed Australian companies also pay less than 10 percent in tax, well below the official tax rate of 30%.

In fact, 84% of the top 200 companies in Australia pay less than the official corporate tax rate, according to a report from the G20 summit last year.

There is a culture that exists in the corporate world where big companies utilise different ways and means to pay the least amount of tax they can. Australian media mogul Kerry Packer won an infamous court case in 1998 that cut his three-year income tax bill from $40 million to almost nothing. On the $1 billion of income he made during the period he paid a total of $30.55 in tax, effectively receiving a tax reduction of $39,999,969.45!

A common method is to move taxable income offshore to branches in countries with low tax rates (the Caymans, Luxemburg, Bermuda, Singapore etc) while at the same time moving their debts to high tax jurisdictions like Australia. This allows profitable businesses to claim they are making less money or even operating at loss to receive tax deductions, or sometime even tax credits!

In 2011, at the height of the mining boom, it was revealed that Andrew ‘Twiggy’ Forrest’s mining company Fortescue Metals had never paid company tax. This didn’t stop Forrest becoming one of the most vocal opponents of Kevin Rudd’s very modest Mining Resource Rent Tax.

The government’s lowered tax revenue has widened the hole in the Federal budget which is currently around $45 billion. Every time this deficit is discussed by governments and mainstream media it is used to justify public spending cuts. Far from needing to inflict austerity on working class, the government needs to collect outstanding tax from business!

A report released by the Tax Justice Network and the union United Voice found that in just the past two years alone, corporations diverted as much as $80 billion of tax away from the Australian Tax Office.

This $80 billion would have been almost enough to wipe out the budget deficit. Yet it suits big business and pro-capitalist politicians to create the narrative that “there is not enough to go around” and scapegoat people on welfare, low paid workers and refugees instead.

The Turnbull government is pushing through cuts to family tax benefits, putting more pressure on families to save about $1 billion a year over the next 4 years. There is increasing support in the government for raising the rate of Goods and Services Tax (GST), a tax that is disproportionately paid by working class people.

There is absolutely no need to increase the tax burden on working people. However, both the major parties unequivocally support the interests of big business over ordinary people. This means they are happy to hand over millions of dollars in ‘tax credits’ to big business, will increasing already unsustainable tax rates on the rest of the population.

The level of corporate control over government was clearly demonstrated in 2010 when the mining industry bosses orchestrated a coup and forced the Labor goverment to replace Kevin Rudd with Julia Gillard. Kevin Rudds mining tax would have seen some of the countries largest mining corporations pay tax for the first time. When Gillard took over, with the backing of the mining industry, she watered down the mining tax to a level that meant many companies were awarded credits that outweighed their tax liability. This means the taxpayer paid them, rather than the other way around!

Ultimately, the corporate domination of the economy means companies will continue to get away with paying little or no tax. They will use whatever means necessary – attacking unionists, threats to offshore work, even political coups – to ensure their massive profits are maintained. This is why socialists argue that working class people need to take the key sectors of the economy out of the hands of the corporate elite and into democratic public ownership. Only then can we ensure society’s wealth and resources are used for the good of the majority, not the narrow interests of the super-wealthy.

By Tim Tran

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