Australia’s stance on tax avoidance out of step, says Bill Shorten

The “Double Irish Dutch sandwich” sounds like something questionable you’d find on the menu at backpacker-run cafe.

But it’s actually a notorious tax loophole in Ireland which allows huge multinational companies to get away with paying tiny amounts of tax through shifting money between multiple countries.

For almost 30 years, some big global firms – including companies operating in Australia – have been using this loophole to pay tiny amounts of tax.

So while ordinary people are expected to pay their fair share of tax every year, some companies earning billions of dollars can get away with hardly paying a cent.

In Ireland, they are finally seeing sense and closing this loophole.

Unfortunately, Australia is going in the opposite direction.

While other countries are their closing their tax minimisation loopholes, the Abbott government has spent the past year opening them up.

One of Treasurer Joe Hockey’s first acts in office was to roll back Labor’s measures to tackle profit shifting and improving tax transparency – effectively handing back $1.1 billion to big global firms.

That’s money that could have gone to helping struggling families with cost of living pressures, or improving our schools and hospitals.

But Mr Hockey wasn’t finished. He then pushed back the start date for Australia’s implementation of key global tax transparency measures that were recently negotiated through the G20.

Transparency is one of the key weapons against multinational tax avoidance, and while the rest of the world’s major economies start sharing important information on company tax in 2017, Australia will sit on the sidelines.

To rub salt in the wound, the Treasurer has slashed nearly $200 million from the Australian Tax Office’s budget – sacking thousands of people who are on the frontline in making sure wealthy individuals and companies are pulling their weight when it comes to tax.

That the Abbott government is running a protection racket for corporate tax avoiders is bad enough, but it’s particularly galling at a time when average Australians are being slugged with higher taxes –  such as the new GP tax, the sneaky new petrol tax and the mooted increase in the GST.

It’s no wonder so many people think the Prime Minister’s first budget is so unfair.

It isn’t fair that the local newsagent is paying more tax in Australia than some huge multinational companies.

And it isn’t fair that while ordinary Australians and small businesses are paying more tax, a few big firms doing the wrong thing are getting off scot-free.

As we’ve seen recently in the pages of the Herald, corporate tax loopholes are substantially eroding Australia’s company tax base and placing an unfair burden on people and businesses doing the right thing.

As the party of fairness, Labor believes in cracking down on multinational profit-shifting. Not for the sake of it, but to make sure everyone is doing their bit.

If big businesses are benefiting from Australian workers, Australian consumers and Australian services, they should make their contribution to Australia’s taxation.

We believe that if a small business owner can pay her fair share of tax,  so can the biggest companies in the world.

In government, Labor introduced tax integrity measures that would have kept billions of dollars of revenue in Australia, and as a constructive federal opposition, committed to policy solutions, Labor is working on new ways to tackle tax avoidance.

We are convening a round table of tax experts from across the country to discuss the next steps Australia can take on multinational profit shifting.

Bringing together some of the country’s best accountants, tax lawyers and policy thinkers will help us work out what loopholes remain and how Australia’s tax laws can be strengthened.

We understand that in a fast-moving international business environment, Australia’s tax rules need to adapt and change to keep pace with corporate tax strategies.

But we’ll always be guided by what is fair – for big firms, for small businesses and for ordinary workers.

We want to tackle corporate tax avoidance so that local and international businesses can compete on a level playing field – and so all Australians are getting a fair deal.

So while Tony Abbott and Joe Hockey keep working to open corporate tax loopholes, Labor will keep working to shut them down.