Finance Michael Pascoe: We have surrendered our sovereignty to the global overlords

Michael Pascoe: We have surrendered our sovereignty to the global overlords

Google and Facebook get a minor inconvenience in a new tax
The tech giants have slowly taken control – and there's little we can do to get it back, Michael Pascoe says. Photo: TND
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The most successful colonisations happen by stealth, by creep, until one day a nation wakes up to find it has lost its sovereignty, that it has lost control.

Pockets of resistance might spring up, but they’re merely sniping from the hills. Any victories against the imperial powers will be small and fleeting, like Indigenous Australia’s Frontier Wars.

That is what’s happening now in most of the world – a few rearguard actions against the new global overlords.

The French are having a crack, the US is waving a flag, even our own little Australian Competition and Consumer Commission is talking about acquiring a pea shooter, but there’s no sign of it amounting to much.

The neo-colonisers of course are the global tech giants, led by Alphabet (alias Google), Facebook and Apple. They have acquired us without a fight after we fell for their beads and mirrors.

While nominally American, they are stateless, floating between preferred tax and legal jurisdictions.

Like a virus (now that we all know so much about viruses), they are free of ethics and exist to grow and spread and be ever bigger.

They are so entwined in our daily lives and commerce that we don’t even know most of what they do yet we think we can’t exist without them.

Over the weekend many a hopeful headline was generated by the G7 proposal to introduce a minimum tax rate of 15 per cent on the imperial forces. The resistance stirred!

Colleague Alan Kohler explained how small the proposal really is.

Australia’s share of that proposal is even smaller – the idea of “topping-up” tax haven rates to 15 per cent will only benefit (in a relatively small way) the nominal host nation of the powers.

For the giants, e.g. Apple with much of its profit channelled through Ireland’s 12.5 per cent corporate tax rate, the US Treasury will collect 2.5 per cent. While 2.5 per cent of Apple’s profits is a lot of money, it’s not a lot of money, if you know what I mean.

If our imperial masters agree to play along and someone can decipher it, countries like Australia might gain something from the G7 clause “market countries (will be) awarded taxing rights on at least 20 per cent of profit exceeding a 10 per cent margin for the largest and most profitable multinational enterprises”.

I think that means that we might be able claim a little tax on the profits made here but recorded elsewhere by the likes of Google, Facebook, American Express et al. Maybe.

The Nobel prize winner and New York Times columnist Paul Krugman was more optimistic, albeit cautiously. I suspect that’s because he looked at it primarily from the perspective of how pervasive and outrageously bad the corporate tax “race to the bottom” has become.

He’s basically an optimistic soul thinking the best of this little resistance:

“What we’re looking at here is the beginning of an attempt to fix a system that is rigged against workers in favour of capital.

“Workers have few ways to avoid income taxes, payroll taxes and sales taxes besides actually moving to another country.

“Multinational corporations, which are ultimately owned in large part by a small wealthy minority, can shop for low-tax jurisdictions without doing anything real besides hiring some skilled accountants. The G7 plan would curb that practice.”

Maybe. Professor Krugman acknowledged that all that we have so far is an agreement among seven finance ministers with important details still to be worked out and many more nations to convince.

“Turning it into legislation won’t be easy: Corporations can hire lobbyists as well as accountants,” he cautioned.

Joe Hockey, right, talked a big game on multinationals’ tax avoidance.

Anyone remember Joe Hockey? He was Treasurer briefly, including during the 2014 G20 meeting Australia hosted. He went into it talking a big game about multinationals’ tax avoidance and evasion:

“The G20’s tax agenda responds to international concern about the ability of multinationals and high wealth individuals to avoid or evade their tax liabilities. The G20 is committed to making our international tax system fairer for all countries, whether they are fully developed economies or not.

“The G20’s tax agenda focuses on addressing base erosion and profit shifting (or BEPS), tackling tax avoidance and promoting tax transparency and automatic exchange of information.”

Beyond a commitment to share more tax information, self-evidently not much was achieved. From the Imperial Overlords to the likes of IKEA, avoidance remains all the rage.

In the end, the countries that matter look after their own and too bad about the rest.

The Biden administration is a breath of fresh air, but corporate America still owns Congress. The home of the FAANGs (Facebook, Amazon, Apple, Netflix, Google) and land of extra-territoriality wants to collect its own tax, not help Australia.

The ACCC boasted that “the world was watching” its minor (and I believe misguided) shakedown of Google and Facebook primarily on behalf of the Murdoch and Nine Entertainment organisations.

The Morrison government quickly caved over what the Overlords found unacceptable. The millions Google and Facebook agreed to dish out is a pittance compared with the tax they should be paying here.

The ACCC is still working on the real issue with Google and Facebook – their dominance, control and ruthless exploitation of online advertising. Good luck with that.

The French competition watchdog has had a slash, imposing a $346 million fine on Google on Monday.

“The decision to sanction Google is of particular significance because it’s the first decision in the world focusing on the complex algorithmic auction processes on which the online ad business relies,” Reuters reported France’s antitrust chief Isabelle de Silva as saying.

And Google said it would make changes to its global advertising business “to ensure it did not abuse its dominance”.

Yeah, right. The point of being an imperial power is to maximise dominance, to extract tax and tribute, not to pay it.

A minor skirmish. A little local autonomy granted. The Empire rolls on.