Abbott keeps prioritising billionaires over battlers

A government that actively undermines tax transparency and fairness is one that does not have the best interests of the Australian community at heart -- and that is exactly what the Abbott Government is doing.

In trying to shield big companies from scrutiny over their tax affairs, the Abbott Government is showing Australia that the wealthiest get to play by a different set of rules.

The Australian Taxation Office is due to publish later this year information about the income and tax paid by Australian companies earning more than $100 million per annum. There are only around 2,000 companies that earn enough to be included in the reporting, but right now the Abbott Government is trying to exclude over 800 of them from the list, meaning their tax affairs will remain a secret.

The government has so far cycled through a handful of different arguments outlining why it is necessary to exclude 800 of Australia’s biggest companies from revealing their tax practises. None of them are convincing.

When the government first floated its intention to roll back the laws first introduced by the last Labor government, Liberal ministers suggested it was because of a security risk to the owners of these big firms.

That argument was dropped fairly quickly when Treasury, the ATO, the Attorney-General’s Department and the Australian Federal Police all lined up to say they’d given no such advice about the laws creating a security risk.

Next, the government suggested that tax secrecy is fundamental to the integrity of our system, and these laws reveal too much information about companies. Some ministers cited the example of Japan, which scaled back its own tax transparency laws for privacy reasons a few years ago.

Of course, confidentiality is an important principle for individual taxpayers and even many businesses. But there needs to be a balance between privacy and the public interest. The corporations currently covered by the transparency law represent just 0.09 per cent of all companies doing business in Australia. Those turning over more than $100 million annually are among the most successful firms in Australia, so there is a legitimate public interest in knowing whether they are paying their fair share of tax.

The recent Senate inquiry into corporate tax avoidance heard evidence that a number of companies are paying effective tax rates of 2 per cent and less. Labor introduced the laws so that basic details about the income and tax paid by big firms could be made public in order to better assess the contribution they’re making to Australia.

The Japanese case is also a false flag. Where our laws apply to companies earning over $100m a year, the Japanese threshold was set much lower, at the equivalent of about $435,000 in today’s money. This meant that instead of capturing around 2,000 corporations, the laws applied to over 84,000 companies as well as up to 180,000 individual taxpayers. Given that the Japanese threshold was 200 times lower than Australia's, it’s a bit sneaky for Liberal minsters to suggest these two laws have much in common.

Most recently, the government has raised the spectre of Coles and Woolworths squeezing their suppliers in business negotiations if they find out how much they earn.

Does anyone really believe these major companies don’t already have access to detailed financial information about the firms they buy from? I can look up IbisWorld’s business database right now and tell you the annual revenue of dozens of Australian food manufacturers. I’d be willing to wager the big supermarkets have access to far better sources of industry information than I do.

The real reason for this rollback slipped out a few weeks ago when one of the Abbott Government’s junior ministers said he is worried about unleashing ‘the politics of envy’ if Australians have access to more information about big companies.

What he presumably means is that Australians might be envious of how little tax some of these firms really pay. Some of those who are suffering under the government's cuts might also envy the way that the Abbott Government time and again seems to prioritise billionaires over battlers.

The current laws will help hold companies accountable and let us see where there are problems that need fixing to create a fairer tax system. If the government rolls the laws back they will be doing Australia a great disservice.

Andrew Leigh is the Shadow Assistant Treasurer and Member for Fraser. His website is www.andrewleigh.com.