Tax secrecy and the mining tax
The Government has received advice that releasing details of the amount the MRRT has raised in the first two quarters since it began operations on 1 July 2012 infringes section 355-25 of the Tax Administration Act. In non-legal terms this ‘secrecy’ provision makes it an offence for a tax officer to disclose details of a taxpayer’s tax affairs.
Estimates were that the Mineral Resource Rent Tax would apply to 320 companies (as compared to the 2500 or so who would be caught be the long ago abandoned Resource Super Profits Tax).
If the tax had bought in some revenue over the last 2 quarters than it would be difficult I think to say that releasing the details of the amount it bought in would reveal any information about any of the 320 companies technically caught by the tax. If say the MRRT collected $100 million we couldn’t say from that that it was from BHP, or FMG or Rio etc. We wouldn’t be able to allocate the amount collected to any company based on that information alone.
One possible conclusion from the Government hiding behind the excuse of tax secrecy is that the tax raised nothing. If that information were to be released we would know that BHP, Xstrata and Rio Tinto paid zero MRRT. Their tax information would be revealed.
Hence the fear that any tax officer involved in releasing that information or giving it to Government for release could be committing an offence and liable to 2 years in jail.
There might be other explanations about the failure to release the MRRT details (e.g. the Government being too embarrassed by the failure of the tax to raise a brass razoo) but let’s assume the law as outlined in general terms above and my analysis that the tax has raised exactly nothing are correct.
The failure to collect any tax under the MRRT is a condemnation of Labor that should ring down the pages of history. The overthrow of Rudd and the compromise Gillard engineered that was the MRRT at the expense of the more thoroughgoing RSPT (itself a fairly minor tax) indicates that Labor has abandoned one of the key roles of social democracy – to rule in the interests of capital at the expense of individual capitalists as needs be.
The RSPT was going to be a redistributive tax within capital. The monopoly like returns that mining companies earn is at the expense of other sector of capital. What the RSPT would have done is re-distribute some of that mining company super profit, via company tax cuts, to the other members of the band of hostile brothers (ie to all capital). The MRRT, designed by BHP Billiton, Xstrata and Rio Tinto, undermined that project.
The result shows not just the failure of Labor to stand up to particular sectors of capital; it also shows the strength of the mining industry.
A left wing social democratic government might have had a plan B in anticipation of the resistance of the mining industry to the RSPT and the threat of a capital strike (more threat than reality in my view given the massive returns mining capital makes without or without resource rent taxes). That plan B could have been to nationalise the mines under workers’ control. Even the threat of that might have forced mining capital to back down, especially if there were a popular mobilisation in class terms in support of nationalisation.
Of course Labor is not that left wing government. It is a party of neoliberalism and kowtowing to the bosses. It fears a mobilising and mobilized working class as much as the mining and other bosses, as much as the union leadership does too.
I should add that it isn’t just mining companies who aren’t paying their way tax-wise.
Google for example has sales sourced in Australia of somewhere between $1 and $2 billion a year, but in the 2011 income year it paid a little over $74,000 in tax. Nice work if you can get it.
Google’s Chairman Eric Schmidt defended his company’s tax avoidance activities around the globe, activities which have seen it funnel almost $10 billion into Bermuda, saving $2 billion in taxes. Schmidt said he was very proud of the tax structures set up. ‘It’s called capitalism,’ he said. ‘We are proudly capitalistic. I’m not confused about this.’
It isn’t just Google. Starbucks has paid no tax in Australia since it commenced operations here in 2000. Apple’s worldwide effective tax rate is 9.8%. Twiggy Forrest’s companies have paid no income tax in the last 16 years.
It seems to work for some individuals too. Bernard Tomic lives in the tax haven of Monaco. Nathan Tinkler has moved to Singapore; one of his neighbours there is Gina Rinehart.
ATO statistics give a hint of the trend in company income tax since 2008.
They show that for 2008/09 59.8% of all business (not just big business) paid no income tax. In 2009/10 that non-taxable company figure had risen to 61.2%, with the break-up of taxable and non-taxable for big business not available. However between 2008/09 and 2009/10 the number of taxable very large businesses fell from 640 to 627 and the amount of income tax hey paid fell from $35.9 billion to $29.3 billion. Company collections between 2007 and 2011 were as follows – $61.7 bn, $60.3 bn, $52.2 bn and $56.2 bn. The estimates for 2012 are billions below predictions.
The global financial crisis is the convenient excuse for this, or the high Australian dollar, or falling commodity prices, or all of the above, but without knowing what Eric Schmidt’s proudly scheming capitalists of big business are up to we should not accept that excuse.
The decline in business tax paid after the GFC occurred at a time when GDP has been increasing and capital’s share of national income has been at its highest ever.
Can we find out which big businesses aren’t paying tax if the secrecy laws shield the release of even basic information? Well, the Parliament itself or its relevant committees has the power to question both public servants and also companies about their tax affairs. Left wing senators Doug Cameron from the Labor Party or Lee Rhiannon from the Greens could bypass the secrecy restrictions on tax officers by asking the companies directly what tax they pay.
For the likes of Google, Amazon, E-bay and Starbucks that would be about what income tax they pay in Australia.
For BHP Billiton, Xstrata and Rio Tinto it would be not just their income tax, but how much MRRT they have paid.
Issue the subpoenas Doug or Lee to the CEOs of the companies I have mentioned. Ask Tinkler and Forrest about their companies’ tax affairs too.
If the UK Public Accounts Committee can question Starbucks, Amazon and Google about their tax affairs, and then condemn them for not paying any tax in Britain, we can do it here in Australia.
A thoroughgoing investigation into the tax affairs of big business is needed to see just what they get up to and whether they are paying a fair share of tax in Australia. After all, what has big business got to hide? Over to you Senators Rhiannon and Cameron.