The Labor Opposition says its plan to crackdown on tax
avoidance by multinationals would save at least $1.9 billion over four years.
Announcing the plan yesterday, Opposition leader Bill
Shorten (pictured) revealed that most of the revenue would come from changes to the arrangements
for how multinational companies claim tax deductions.
In a practice called ‘thin capitalisation’, multinational
companies can currently claim up to a 60 per cent debt-to-equity ratio for
their Australian operations. Labor would change this so tax deductions have to
be assessed according to the debt-to-equity ratio of a company’s total
In addition, the policy involves greater compliance work by
the Australian Taxation Office to track down corporate tax avoidance as well as improved
transparency and data matching.
“It is not fair that Australians work hard and pay tax while
big multinationals get to play by different rules,” said Shadow Treasurer Chris
Bowen in a statement.
“It is not fair that Australian businesses are paying more
tax in Australia than big multinationals.”
As the SMH reports, Treasure Hockey claimed he had received advice
from Treasury that the proposal would cost jobs.
“That will cost jobs at Unilever, at Shell, at
McDonald, at IBM. That will cost Australian jobs because if you make it more
expensive for international businesses to operate in Australia they will simply
reduce their operations, as we have seen with car manufacturing
companies,” he said during Question Time.
Kate Carnell, CEO of the ACCI also claimed the proposal
would cost jobs and said any such changes should only be taken as part of
coordinated global action.
“Any changes to Australia’s international tax rules must be
made in cooperation with our OECD partners and be part of the wider tax white
paper process. Otherwise we run the risk of undermining investment and
worsening unemployment,” she said in a statement.
ACTU Secretary Dave Oliver backed the policy announcement.
“While the Liberal Government pursues an ideological agenda
against unions and seeks to resurrect WorkChoices, they don’t seem interested
in stopping their mates at the big end of town and their corporate rorts that
cost Australian taxpayers billions in lost revenue every year,” he said in a