Labor’s Google tax can pave the way for fairer system

World Vision Chief Executive, Tim Costello has welcomed Labor’s plan to crack down on companies such as Google that deliberately shrink their Australian tax bill by ‘shifting’ profits offshore, as an important first step to creating a fairer, more equitable tax system. 

“Certain companies are getting a free kick not paying their fair share of tax on the profits they are making in Australia and as a result the tax burden is falling more heavily on the rest of us,” Mr Costello said.

Australians are keen to see the tax obligations of corporations more closely aligned to their actual activity, and thus less easily manipulated for the benefit of only a few.”

Mr Costello called on the Federal Government to adopt a bipartisan approach to making the Australian and global tax systems work better after the Leader of Opposition, Bill Shorten announced that if elected Labor would standardise tax rules to close a loophole that allows foreign-based companies to treat assets as debt.

Mr Costello said that it was timely to see a policy that would be addressing the revenue side of the budget imbalance which the Government had failed to do to date.

 

“We’ve been saying for a long time that you can’t cut your way to a sustainable budget position and that there is an urgent need to address the revenue side of the budget through real reform especially to our taxation system.”

 

Describing the proposed reforms as a good chance to harvest some ‘low hanging revenue fruit’, Mr Costello the Government could start the bipartisan ball rolling by adopting Labor’s proposal to bring forward the start date on improved third party reporting and sharing of data to 1 July 2015.

 
A less hysterical approach to tax reform was needed if a fairer path to budget repair is to be found he said.

By drawing on a broad range of expertise, and committing to further consultation around the best way to implement the proposed changes, the Opposition has signalled a sensible way forward on the vexed issue of tax reform.

The Opposition is also promising to better fund the Australian Taxation Office so it is properly resourced to pursue multinational profit shifting.

“These proposals address some of the complex challenges thrown up by increasing base erosion and profit-shifting, which sees around many billions ‘leak’ from national revenues globally, Mr Costello said.

“That represents a huge lost opportunity to provide the basic services necessary to foster healthy, well-educated societies both here but especially in developing countries”

Global action won’t happen overnight, but what is important about Australia taking action is that it sends a strong signal to other countries that they need to do the same.

END

For interviews with Tim Costello please contact: Mary-Louise O’Callaghan on 0427 413 816 or mary-louise.ocallaghan@worldvision.com.au