By Andrew Leigh.
Scott Morrison should commit to a formal review of the Multinational Tax Bill by 2018, as recommended by the Senate Economics Committee this evening.
The committee’s report reflects Labor’s reservations about the Government’s untested approach to tackling multinational profit shifting.
It recommends the Bill be evaluated within three years of its 2016 start-date to determine whether it has successfully stopped companies siphoning profits offshore.
With Treasury unable to say how much revenue the Government’s plan might return to Australia, and no other country having successfully implemented Australia’s approach, it is right that the tax Bill should be subject to serious evaluation in the future.
A review of the tax Bill should address the following questions:
- How many successful tax avoidance cases has the Australian Tax Office concluded under the new rules?
- How much additional revenue has been collected in Australia because of the new rules?
- How much time and money has the Australian Tax Office spent in court pursuing cases under the new rules?
- How many disputes or conflicts with foreign tax laws have occurred as a result of the new rules?
Treasurer Morrison should make a public commitment to carry out this review and name the date by which it will be completed.
Labor has consistently said that the Government’s tax package does not go far enough because it does not target debt deductions.
Our $7.2 billion package ensures companies aren’t simply loading up on debt in Australia and sending profits overseas. The OECD’s Base Erosion and Profit Shifting Action Plan has flagged debt deductions as a big part of the global tax problem. That is why Labor has developed a Parliamentary Budget Office-costed policy to close these loopholes.
We are supporting the Government’s Bill through the Parliament because protecting Australia’s revenue base is too high a priority to get caught up in politics. In this same spirit, we have called for the Government to adopt our package as a further step in multinational tax reform.
The Government does not need to wait three years to find out that Labor’s proposals would improve its current Bill. It could put our proposals to the Parliament today to really tackle tax avoidance on all fronts.
Of course, stubborn Scott Morrison says he is confident in the Bill that is already before Parliament. Then let him prove it by committing to a full, rigorous and transparent review of its effectiveness by 2018 at the latest.
