Big Business: The real tax bludgers!

by Max O.

The largest companies in Australia have been able to dodge $80 billion in tax between 2004 - 2013, argued the United Voice union and the Tax Justice Network.

In their joint report, "Who pays for our Common Wealth", it found that of  Australia’s 200 top stock market listed companies, 84% of them paid less than the company tax rate of 30%.

The story gets worse because almost a third of these companies have an effective tax rate of just 10%. How low can you get? Well 10% of these ASX200 companies paid a tax rate of 5% or less!

21st Century Fox, from the Murdoch stable of companies, effectively paid a tax rate of 1%. Then there's James Hardy, of the asbestos infamy, paid virtually zero tax.

If you thought it can't get any worse than this, the mining giant Glencore received a tax rebate of $8 million! Overall the report found that the effective tax rate of ASX 200 companies during the last decade was 23%.

Quite a difference from the official statutory rate of 30%. The proportion of total tax revenue from business, over the past five years has fallen from 23% to 19%.

In stark contrast the proportion of tax paid by individuals, over the same period (2004 - 2013), increased from 37% to 39%. Add the burden of the regressive Goods and Services Tax, which hits the less well-off, one can see who suffers the tax burden.

But as the big end of town continually reminds us, avoiding tax is not illegal. Australia’s taxation system makes it completely legitimate.

How business gets away with it

By using tax havens, where big business establishes subsidiaries who carry out transfer price fixing (these subsidiaries overcharge the parent company for goods and services) thus transferring their profits to the offshore haven.

Of the 2,156 companies listed on the ASX, who have a reported 26,096 subsidiaries, 524 of these companies acknowledged 15,564 subsidiaries were located in secrecy jurisdictions.

The most common tax havens are Bermuda, British Virgin Islands, the Channel Islands of Jersey and Guernsey, Hong Kong, Malaysia, Mauritius, Luxembourg, Singapore, and Switzerland.

It is known that 119 ASX200 listed companies are registered in Bermuda and Jersey, where their tax rate is zero.

The "Who pays for our Common Wealth" report disclosed that at least 60% of the ASX200 companies declared debt levels of over 75%, indicative of tax avoidance scams. These companies as well borrow from their subsidiaries, where tax deductible payments are made in Australia but the interest goes to the zero tax rate tax haven.

BHP Billiton, Commonwealth Bank, Rio Tinto, Telstra Toll Holdings and Westfield carry out this type of tax evasion practice. Their business ethics demand that the bigger their profits are the lower the taxes should be.

Another tax evader culprit is Apple Computer. Since 2002 Apple sold $27 billion of products in Australia. However they have paid just $193 million in tax, suggesting their profit was around $500 million. Estimates have put Apple’s actual profit at $9 billion, which no doubt was shifted to a tax haven.

Subsidies for corporations

Another method of tax evasion is the iniquity of government subsidies, especially to the mining corporations. The August Vanguard article, "The age of entitlement keeps getting bigger for mining corporations" details the enormous amount of corporate welfare that is handed over to the mining giants.

Other subsidies are the corporate health insurance company rebate, where the Commonwealth government gives the 30% subsidy towards insurance premiums – a $6 billion bonanza to the insurance industry and private hospitals. Then there is the fossil fuel subsidy which costs the Commonwealth government over $10 billion each year.

Consequently the government loses many billions of dollars in revenue by subsidising the corporate sector, then uses the lack of revenue to carry out austerity attacks on social welfare. The Australian Council of Social Service reports that one in seven Australians or 2.5 million people are living below the poverty line.

In recent decades there has been a massive transfer of wealth from the 'have nots' to the 'have mores'.

For example the seven richest seven people in Australia hold more wealth than 1.73 million households in the bottom 20%.

It cannot be said enough, that the profits and wealth that capital accumulates comes from workers' labour power . The above facts and figures demonstrate the point that the major purpose of capitalist governments is to ensure that corporations can maximise their profits.