Multinational Tax Evasion and the Common Reporting Standard

In seconding the amendment, which would bring forward the tax transparency provisions and the application of the Common Reporting Standard, I think that it is very important that we do talk about what can be done to improve tax transparency and to crack down on tax dodgers in this country. That is why I am so pleased to second this amendment, because, unlike the Turnbull government, my actions are consistent with my words. I say we should crack down on tax dodging, and I want us to crack down on tax dodging. That is why I am seconding this amendment.

If the Turnbull government were going today to arrest its tendency to say one thing and do the other, then it would be voting for this amendment that is before the House today; it would be voting to bring forward the tax transparency obligations under the Common Reporting Standard; and it would be voting to support Labor's amendment, because, unlike the coalition, we are serious about cracking down on tax dodgers. We are serious about saying what we mean and doing what we say—unlike the Turnbull government, headed by a Prime Minister who is Australia's answer to Sir Jeffery Archer, a man who is doing his best to make sure that it is the most important and exciting time in the history of the world to be a tax dodger in Australia!

We have heard coalition speakers get up in this debate and say, 'Oh, Labor didn't vote for our tax bill at the end of last year.' Why would we vote for it? We stand for transparency. We believe in transparency. We believe in cracking down on multinational tax evasion and on tax dodging. That is why in 2013 we introduced greater transparency laws, to ensure that people and companies pay their fair share of tax—like you do, Deputy Speaker Scott, and like every working Australian does in this country. We introduced those measures. What does this government do? This government comes in and says: 'You know what? If you're a firm of $100 million in turnover, you should be exempted from transparency provisions.' What an utterly ridiculous and disgraceful act from this government, which is the best friend that tax dodgers ever had! Why would we vote for that legislation? Why would any sensible member of this place vote for that legislation? Why did the Australian Greens vote to water down tax transparency, one might ask.

In this place, when it comes to making sure that people are paying their fair share of tax, we say and we have always said that transparency matters—that seeing and knowing what companies are paying and what they are doing is very important in ensuring taxation compliance. It is the disinfectant of sunlight that helps the Australian people make sure that people and firms who are making profit here are making their fair contributions to the services on which we all rely—to building roads, to building infrastructure, to paying for health care, to paying for education. We think it is fair that if you do business here then you pay tax here and make a contribution to the Australian community. It is a principle that everyone in this place ought to share. Instead of standing up and grandstanding and instead of standing up and having a go at Labor for having the gall to say that $100 million turnover firms should have transparency obligations, what the coalition should be doing is supporting this amendment, the Labor amendment to improve taxation transparency right now today. They should support this amendment.

I am very pleased that this government is finally getting to the point of passing legislation to implement the Common Reporting Standard. In 2014, Australia was the president of the G20. You could be fooled into not realising this because our Prime Minister was talking about the GP tax at the G20, but most of the world's leading nations were talking about base erosion and profit shifting. There was a strong agenda for base erosion and profit shifting to be combatted and for the international community to work together. I was pleased when the then Treasurer committed Australia to supporting the Common Reporting Standard, but it took another year—a full 12 months—for the exposure draft of the Common Reporting Standard legislation to be released to the Australian public.

It is a shame that Australia has lagged behind the international community when it comes to the implementation of the Common Reporting Standard. I want to say something about why the Common Reporting Standard is so important. In the introduction to its report, which was titled Standard for Automatic Exchange of Financial Information—Common Reporting Standard Report, the OECD said:

As the world becomes increasingly globalised it is becoming easier for all taxpayers to make, hold and manage investments through financial institutions outside of their country of residence. Vast amounts of money are kept offshore and go untaxed to the extent that taxpayers fail to comply with tax obligations in their home jurisdiction. Offshore tax evasion is a serious problem for jurisdictions all over the world, OECD and non-OECD, small and large, developing and developed. Countries have a shared interest in maintaining the integrity of their tax systems. Cooperation between tax administrations is critical in the fight against tax evasion and in protecting the integrity of tax systems. A key aspect of that cooperation is exchange of information.

That is what the report said.

The Common Reporting Standard allows authorities to automatically exchange information about the contents of company and individual bank accounts held overseas. Multinational companies and wealthy individuals have often been able to avoid paying tax in one country simply by sending their money offshore to another jurisdiction so that tax authorities cannot see it, but under the Common Reporting Standard there will be far fewer places to hide. Over 90 countries will now exchange information about what is held in bank accounts in their jurisdictions so that authorities can more accurately assess tax bills and better identify profit-shifting and aggressive tax planning. It is the kind of coordinated, positive outcome that is possible when governments around the world come together and take the challenge of tax avoidance seriously.

Multinational tax evasion is an issue to which this government, the Turnbull government, had to be dragged kicking and screaming. Last year Labor announced a PBO-costed, carefully considered $7.2 billion package of measures to stop multinationals shifting their profits out of Australia and avoiding paying their fair share of tax. We are strongly of the view that there ought to be a commitment to the Common Reporting Standard by this country. We have also indicated that we will support the measures such as they have been from the coalition to crack down on multinational tax evasion now that they have been dragged kicking and screaming to doing so, even though in last year's budget the Treasurer at the time was unable to tell the Australian people how much their own measures would raise, giving us only a serious of asterisks. But, as I have said, that means making sure that companies are paying their fair share of tax through compliance and through transparency. Transparency actually matters. As I have said, it should not be left to law-abiding companies and Australian households to bear all of the tax burden while big firms are shifting their profits overseas and evading their tax obligations.

As well as facing up to tax evasion as an issue for our own budget domestically, we also need to be working with the international community to tackle this global problem because of the impact that it has on developing nations as well. The size of the foreign aid budget internationally is dwarfed by the value of tax that is evaded in developing countries by large corporations. In other words, if large corporations pay their fair share of tax in developing countries then that will assist the world in making sure that those developing countries are able to reach their potential. Those developing countries are missing out on their entitlement to a fair share of taxation revenue and, as a consequence, that obviously means greater demand for aid.

Analysis by one.org shows that at least a trillion dollars each year is being siphoned out of developing countries. It is revenue that could be used in the fight against extreme poverty, disease and hunger. It costs lives and it undermines the efforts of developed countries' aid commitments. The UN Office on Drugs and Crime estimates that every $100 million recovered from tax dodging and corruption could fund full immunisation for four million children, provide water connections for some 250,000 households or fund treatment for over 600,000 people for HIV-AIDS for a full year. In its Shine the Light campaign, Micah Challenge points out that most of the money flowing out of developing countries is not taken by corrupt politicians and dictators but by large multinationals who exploit loopholes in the global tax system to shift their profits away from the countries they operate within in in order to avoid paying tax. While all countries are being robbed of revenue through tax evasion, it is developing countries that suffer the worst. When multinationals and wealthy individuals avoid paying taxes, everyone else has to either pay more tax or go without services. When firms do not pay their fair share, it means that the rest of us suffer; it means the rest of us have to pay more tax than we otherwise would have to, or we have to forgo government provided services.

As I have said, the impact on developing countries is devastating—denying them the need to be self-sufficient and making them dependent on aid and debt. So, putting an end to tax dodging and corruption will help in the fight against global poverty and, as I have said, putting an end to it here will lessen the need to ask households to front up and pay more. This is a government that has been hanging a GST increase out in front of people for months: 'Will they, won't they? Will they, won't they?' We have a Prime Minister in Prime Minister Turnbull who has refused to come clean with the Australian people about the coalition's plans on a price rise on everything or the coalition's plans to extend a GST to health care, food and education fees. We have a Prime Minister who thinks that middle-class households should bear more of a tax burden in order for there to be tax cuts—personal income tax cuts—for the people at the top of the income distribution and for companies. This is the sort of government that is the big firms' best friend. They do not care about the fact that middle-class households would be asked to pay more of a tax burden under an increased GST. They do not care about the fact that small businesses would suffer, not just because of the increased compliance obligation from having to retain more money across more items for GST but also because the customers of those same small businesses are wage earners. If you increase the price on everything for wage earners at the same time as you are mounting an attack on their wages via the attacks on penalty rates then small businesses will suffer because those are their customers.

This is a government that does not care about small business; it is a government that does not care about working people. It is a government that has done everything it possibly can to reduce tax transparency for its mates—the big firms earning $100 million in revenue every year. A firm earning $100 million in revenue should not have an exemption from tax transparency provisions

It certainly should not. The Australian people deserve to know that firms with a turnover of $100 million are paying their fair share of tax—just as you are, Deputy Speaker, and just as every person who is earning a wage. We are all expected to pay fair share of tax. Big firms—firms that turnover $100 million or more and multinational firms—should be expected to pay their fair share as well.

We want the common reporting standard put in place as soon as possible. It is so disappointing that the Abbott and now the Turnbull government has committed us to a timetable which sees Australia lag behind most of the OECD and other advanced economies. More than 40 countries will begin exchanging information in 2017. The group of so-called early adopter nations includes the UK, Argentina, France, Germany, India, Italy and Mexico, as well as many EU members. Over the past two years, Labor has repeatedly called for the Liberal government to sign Australia up to a timetable that matches these early adopter countries.

As I said, it was fantastic at the G20 Finance Ministers' meeting in September 2014, that the then Treasurer committed us to the CRS, but it was a real shame that in the year in which we were the president of the G20, he squibbed the opportunity for Australia to take a leadership role by joining that the early adopters group. Instead, the Turnbull government has dragged its feet in bringing forward this legislation, and Australia will not begin exchanging information with other countries until late 2018. That lines us up with countries like the Bahamas, Russia and the UAE, rather than with the leading G20 nations—hardly the actions of a government that is eager to crack down on multinational tax evasion or to tighten the global tax net.

Worryingly too, the government has proposed a two-stage implementation process that will let big companies off the hook until 2019. While banks will have to report on the accounts held by individuals in 2018, the government is proposing a 2019 deadline for corporate entities. It is not good enough. The government should vote for Labor's amendment today. We do not believe there is any good rationale for delaying reporting on corporate entity accounts by a full year. There should be one reporting deadline, 2018, to ensure this information is available sooner. In moving the amendment to bring the deadline for reporting on corporate entities into line with that of individuals, we know that many of the Senate crossbenchers share our deep concern about big companies avoiding their fair share of tax. The Turnbull government claims to share this concern, but as with every other issue, they say one thing but they do another. Do not listen to what the Turnbull government says, looks at its actions. What are those actions? The government says it is cracking down on tax evasion while at the same time they are weakening transparency for firms with a turnover of $100 million.

We would urge those senators on the crossbenches to support our amendment and urge the Turnbull government to get serious about tax evasion.

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