The Western world needs to tackle multi-national tax avoidance a “bit like” it has tackled the Islamic State terrorist group, maverick Liberal senator Bill Heffernan says.
Senator Heffernan has for years argued tax avoidance is a threat to sovereignty and thinks it will take a coalition of Western countries to begin to stamp out the problem.
“It will take a concerted effort by a group of nations, a bit like the present ISIS problem — you’ve got to get a group of nations together,” Senator Heffernan said.
“Some tax law is like a telegram, it’s out of date. The law has been outsmarted by technology.”
Today, tech giants Apple, Microsoft and Google will be grilled about the way they structure their finances during a Senate inquiry into corporate tax avoidance.
Senator Heffernan said he hoped the inquiry would make more “average taxpayers realise what’s going on”, but expects the large corporations to give few details.
“A lot of the corporates will be in denial because in their mind, with smart accountants, they haven’t been breaking the law,” he said.
“It’s a bit like the churches or our institutions in child abuse for the last 50 years being in denial.
“Globally, trillions of dollars are on the merry-go-round.”
Lowering corporate tax rate won’t solve issue: Labor senator
Labor senator for New South Wales Sam Dastyari will chair the inquiry.
He said Australia needed to crack down on companies moving profits overseas and shifting debts to avoid paying tax.
“The ATO itself tells us that $60 billion a year is being moved from internal company transfers to tax havens,” he told Lateline.
Treasurer Joe Hockey has spoken extensively about trying to make more companies pay tax where they earn profit.
But Senator Dastyari said the Treasurer’s plans to lower the company tax rate to increase competition would not be enough to solve the issue.
“I think there’s a false premise there that … you’re somehow going to be able to compete in price [with] Bermuda, that will charge you 0 per cent, or Singapore, where you can get a sweetheart deal of 2.5 per cent,” he said.
“[The] corporate tax rate in this country is 30 per cent. If you want to have a debate about lowering the company tax rate, that’s a valid debate to have, but it’s not going to solve this issue.”
Sydney University’s Professor Richard Vann, who will also give evidence to the Senate inquiry, said new laws could add billions of dollars to the budget bottom line.
“You would be talking in the billions, but I think the low billions,” he said.
“The companies seem to say, whenever asked to appear, that what they do is legal.
“But particularly, so far as their intellectual property is concerned, it seems to be largely located in tax havens, where nothing happens, and that must be a defect in the rules.”