The Australian tax Office has now put a figure on the amount of tax avoidance being carried out by major corporations and multinationals.
Major corporations are defined as those with a gross income of over $250 million a year. They failed to pay out a whopping $2.5 billion in the 2014-15 financial year. The Tax office also says this has been the pattern over some years.
The consequence is that Australians miss out on government services that could otherwise be financed by this money.
It is even worse. The amount estimated is well under what it really is, because only some types of non-compliance have been considered.
Oxfam Australia’s Economic Policy Advisor Joy Kyriacou said $2.5 billion was a conservative estimate. “The ATO can only report on what large companies are bound to tell it, not on taxes which multinationals are dodging through legal tax avoidance”.
Treasurer Scott Morrison’s 9 own this year’s May statement, admitted that the scale of tax evasion is significantly greater, at more than $7 billion.
Estimates by the The Tax Office are also reduced because of the practice of cutting deals, rather than prosecute corporations that have avoided paying tax. Only amounts to new deals are counted.
This is not good enough. The expectation is that the actual debt would be followed up diligently and the whole truth getting out there is important, to show what has to be done in order to put an end to corporate tax evasion, which on the scale that it is occurring in Australia, must be having a major impact on Australian society and the economy.
If money that is syphoned out overseas (acceptable under the present letter of the law) is taken into account, it would add at least another $6 billion a year, to the amount of lost money. In comparison, the government’s budget deficit is $33 billion.Recovering the taxes not paid would clean the slate in a few years. And this is far from the whole picture of financial benefits corporations get from government.
Yet is the budget deficit that provides the excuse for bullying through Centrelink, where the value of benefits were cut last year by $5 billion. A broad range of services important to the whole Australia community also continue to be cut. There is absolutely no doubt this is one of the reasons for growing inequality. It is unfair.
The government’s failure to take effective action on this, while going on with the cuts, is the height of hypocrisy, because what is really being done, is that fat cats are being bankrolled at the expense of everyone else.
At the same time, the government denies itself the funds it needs to play its potential role as a player in the economy, as a supplier of resources and a stimulative consumption. The consequence is less economic activity and this flows through to impact on the whole of society. It doesn’t stop here. Tax avoidance on the scale that is occurring in Australia, must significantly distort investment patterns and this in itself, leads to more problems.