Labor's tax inquiry to ask if regulators are 'soft' on tax avoidance
Tax Commissioner Chris Jordan will be asked to address concerns that tax authorities have been “soft” on tax avoidance at a Senate inquiry hearing on Thursday.
The inquiry, which follows the explosive revelation of the Panama Papers by the International Consortium of Investigative Journalists – more than 11.5 million documents that were hacked from Panamanian law firm Mossack Fonseca, alleging tax evasion, money laundering and other crimes by wealthy individuals and politicians.
The papers have prompted a global hunt for criminals, and raised questions about the inability of tax regulators to ensure multinationals pay their “fair share” of tax.
It is estimated trillions of dollars is lost globally each year due to crime, corruption and tax evasion. The local cost of tax avoidance is also high, with estimates United States corporations avoid an estimated $2 billion of tax in Australia each year by shifting their profits to low or no-tax countries.
Mr Jordan, who is chair of the Joint International Tax Shelter Information & Collaboration network (JITSIC), which includes the heads of tax administrations from 38 countries, will give an update on a recent trip to Paris where the administrators met to discuss strategies such as better information sharing.
He will be joined by other ATO senior executives including Deputy Commissioner International, Mark Konza, Deputy Commissioner Private Groups and High Wealth Individuals Michael Cranston, and Deputy Commissioner Public Groups Jeremy Hirshhorn.
The inquiry will also hear from Four Corners investigative journalist Marian Wilkinson, who was one of more than 300 journalists involved in the ICIJ investigation, Tax Justice Network Australia director Mark Zirnsak, and from academics including University of Sydney Business School senior lecturer Shumi Akhtar and University of Technology accounting professor Roman Lanis.
Labor has called the inquiry as multinational tax avoidance has been at the centre of political debates in Canberra during the past year, and will be one of the key policy issues leading to the federal election, likely to be held in July.
The May 3 federal budget is also expected to include policies to fight multinational tax avoidance, including changes to thin capitalisation rules that put restrictions on the ability of multinationals to get debt deductions for their investments. The Turnbull government plans to reduce from 60 per cent to 50 per cent the amount of debt a multinational company can load into their Australian operation.
Senator Chris Ketter, chair of the Economics References Committee, which is holding the inquiry, said the public wanted governments to “clean up unethical business practices”.
“We’ve held multiple hearings around the bad behaviour of multinational companies and the Panama Papers have really helped to set the groundwork for further scrutiny,” he said.
The Labor inquiry follows last year’s Senate inquiry into corporate tax avoidance – which had been initiated by former Greens leader Christine Milne.
Executives from some of the world’s biggest multinationals including US technology companies such as Google, Apple, Microsoft, sharing-economy services such Airbnb and Uber, as well as miners BHP Billiton and Rio Tinto, were called before that inquiry.
The executives were quizzed on why they use tax havens in Bermuda, as well as incentives given in low-tax nations such as Singapore and Ireland, which allow these companies to devise tax minimisation strategies and pay lower tax rates.
The new Labor inquiry comes as overseas governments scramble for solutions to stop multinational tax avoidance amid widespread public dissatisfaction.
On Tuesday night the International Monetary Fund, the Organisation for Economic Co-operation and Development, the United Nations and the World Bank Group announced a “platform” for regular discussions among the four organisations.
Its members will hold regular meetings with representatives of developing countries, regional tax organisations, banks and donors, and will work together in designing strategies to fight multinational tax avoidance, as well as ensure better information sharing and greater transparency.
The World Bank and the International Monetary Fund recently warned tax avoidance has had a “tremendously negative effect on our mission to end poverty”.
The story Labor’s tax inquiry to ask if regulators are ‘soft’ on tax avoidance first appeared on The Sydney Morning Herald.