Water controversy prompts tax haven focus
Tax avoidance has crept into the tussle of the federal election campaign, as the government faces pressure to further investigate an expensive water purchase from a company based in a well-known tax haven.
Labor has left the door open to supporting a Greens push for a royal commission into the Murray-Darling Basin Plan, after questions resurfaced over a $80 million water buyback from two properties.
In 2017, the government bought 28.7 gigalitres of water from two Queensland-based properties owned by Eastern Australian Agriculture, Clyde and Kia Ora, at a record cost of $78.9 million.
The company was co-founded by Energy Minister Angus Taylor, who says he has had nothing to do with it since entering parliament and received no benefit from the sale.
Eastern Australia Agriculture’s parent company is based in the Cayman Islands, a well-known tax haven.
But Prime Minister Scott Morrison has stressed that the sale, authorised by then-water minister Barnaby Joyce, was above board.
Labor is nonetheless using the fresh mention of tax havens to try and turn voters’ attention to the issue of tax avoidance, as they prepare to head to the polls on May 18.
Opposition spokesman Andrew Leigh says tax havens undermine the Australian tax system and are used to hide the proceeds of fraud and corruption.
A Labor government would introduce a comprehensive suite of policies designed to expose the use and abuse of tax havens, which the coalition opposes, he says.
“A company based in a tax haven operating in Australia would face a very different reality than it does today,” Mr Leigh said.
The policies include forcing any company subject to a government contract of more than $200,000 to state their country of domicile for tax purposes.
The beneficial owners of Australian companies and legal entities, including trusts, would also be laid bare on a public accessible registry.
Beneficial owners are those who enjoy the benefits of ownership, without being formally recorded as an owner.
Labor would also help fund a global scheme which helps developing nations audit multinationals so that they pay their fair share of tax.
The coalition says Australia is already a global leader in the international fight against corporate and multinational tax avoidance.
A spokesman for the Liberal-National election campaign said the coalition has implemented more than a dozen measures to address the issue in the past two years.
The government is adopting the recommendations of an OECD and G20-led project aimed at dealing with tax avoidance, including country-by-country reporting and anti-treaty abuse rules.
It’s other tactics include introducing a multinational anti-avoidance law, a 40 per cent diverted profits tax and doubling the penalties for multinationals that seek to avoid tax.
