Oxfam Australia Says Government Needs To Crack Down On Tax Avoidance

Tax Avoidance

Oxfam Australia says that in the wake of the publication of the Paradise Papers, the country should create a global blacklist of tax havens and crack down on people and companies that use them. The aid agency says the extremely wealthy are robbing the poorest people in the world of much needed tax revenues and this can be avoided if countries such as Australia take concrete steps towards tax reform.

The Paradise Papers

The Paradise Papers revealed the offshore financial affairs of some of the wealthiest people and biggest multinationals in the world. Dr Helen Szoke chief executive of Oxfam Australia says tax evasion by multinationals in Australia was costing billions of dollars and making the global inequality crisis worse. The aid agency says that international tax reforms have simply not worked. One estimate suggests that global multinationals artificially shifts 45 per cent of profits to low or no tax havens.

Tax avoidance costs billions

According to the Australian Tax Office (ATO) multinationals managed to avoid as much as $2.5 billion in taxes during the 2014-2015 financial year. ATO data shows that large corporations reported $1.5 trillion in gross income during that time frame and paid roughly $41 billion in tax. From this information the ATO was able to estimate the gap between what should be paid and what is actually paid if all companies were fully compliant. The figure was put at $2.5 billion or 5.8 per cent of total tax payable.

Reforms required

Andrew Leigh a treasury spokesperson for the labor party says that his party agrees that immediate action must be taken by the government in order shut down tax loopholes. The labor party unveiled a number of tax policies earlier in the year which would force companies to reveal tax haven risks to their investors. A public register of beneficial ownership would need to be established and the total amount of funds transferred overseas from Australia would need to be published.

More transparency needed

Mr Leigh says his party’s policies would deliver more transparency because listed companies would be required to inform their investors about tax haven dealings. Secondly, companies wishing to participate in a government tender would be forced to reveal their country of domicile and there would be a public register showing whom the owners of Australian based companies really are. Multinationals would also be required to publicly report how much tax they pay in each jurisdiction they operate in.

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