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.
