Senator MARGETTS (12:16 PM) —The Taxation Laws Amendment Bill (No. 2) 1998 contains an array of provisions, including a crackdown on tax avoidance measures relating to the artificial creation of capital losses, changes to the calculation of capital gains tax, changes to an entity's tax status to cut down on depreciation advantages, reduction in compliance costs relating to fringe benefits tax and clarification of dividend imputation credits for life insurance companies. On the whole, the Greens (WA) are supportive of these measures. However, I would like to focus on two main issues raised by this bill. Firstly, I would like to discuss issues relating to tax avoidance and, secondly, I want to discuss the fringe benefits tax regime.

This bill attempts to tackle some areas that have been exploited for tax breaks. The Greens are certainly supportive of moves in this direction. However, we have major concerns about the government's general apathy in tackling some of the biggest issues in tax avoidance in Australia. The problem of tax avoidance in Australia is becoming more and more of a talking point. As Jennie George, President of the ACTU, has recently pointed out in committee hearings on the tax package, PAYE taxpayers are feeling that they are the only ones paying their fair share of tax in this country. They feel as if they do not have the ability to work the tax system and minimise their income tax as many high income earners are able to do. The average taxpayer does not have the money to be paying financial consultants, accountants and lawyers to devise elaborate schemes to evade the Australian Taxation Office. The average taxpayer cannot take advantage of the many tax effective products which are blatantly and aggressively marketed. Splashed unashamedly in our weekend newspapers are advertisements that are selling expertise in tax minimisation techniques.

It may be argued that this is mere populist thinking that does not accord with reality. It may be argued that this is merely some kind of corporate bashing or cutting down the tall poppies. However, it seems that our very own Tax Commissioner shares elements of this populist thinking. It was reported earlier this month, on 1 February, on the news wire that internal memos issued by the Tax Commissioner, Michael Carmody, have warned that the tax system has been taken over by large companies and that they could not be trusted to pay their fair share of tax. Yes, our Tax Commissioner, who is absolutely in the thick of things, sees tax avoidance by large companies as a huge issue for Australia's revenue base.

Of course, the government's answer to our declining revenue base is to hit us with a GST. Certainly a broadening of consumption tax is one option that will help add to the revenue base, but at what cost? The cost is that it is the PAYE taxpayers, especially those on low incomes, who will be affected the most by the implementation of a GST. Even on the government's own figures, it is the high income earners who will gain the most from the tax package.

There is no real commitment to tackle the problems our Tax Commissioner has identified. Michael Carmody has also warned the government that the tax package will create fresh tax avoidance opportunities. Our Tax Commissioner is concerned that high income earners and businesses will take the opportunity to delay their income until July 2000 to take advantage of the tax cuts on offer. This will reduce revenue collection when the tax is finally paid. Michael Carmody estimates that it could deprive the budget of hundreds of millions—or even billions—of dollars. In addition, international experience suggests that the GST will create a whole new black market of its own.

Along with the tax package that is currently before the Senate, we have the review of business tax, the Ralph review, taking place. This review is not attempting to tackle any issues such as how to maintain an adequate revenue base to meet our needs. The boundaries of the review are that it must be revenue neutral. It is also not attempting to tackle any issues of corporate tax avoidance. It would hardly be in many of the participants' interests to do so. The Greens have strongly argued that business tax should not be siphoned off into a separate debate. In fact, I moved a motion in the Senate last year to ensure the results of the review of business tax were known before the Senate debated the rest of the tax package. Unfortunately, this sensible motion was defeated so now we cannot look at the tax system as a whole and decide how we would like to structure it as a community. No, the business tax area has been shoved to one side so it cannot be touched in the more general debate about tax reform. So suggestions such as the minimum corporate tax that has been raised by many non-corporate players in the community barely rate a mention in the review of business tax. Many of these community and church groups do not have the time to engage in the RBT as they are struggling to try to inject some equity and fairness into the rest of the tax package.

Tax reform in this country needs to be holistic, transparent and fair. It is totally hypocritical of the government to undermine the Senate committee process by threatening to pull the whole tax package if the Senate makes any substantive changes. Yet, what is happening with business tax? Is the government trying to tell all those business folk making lengthy submissions that it is all in vain and that it will not be giving any concessions, making any adjustments? If the government does make concessions and alterations in the business tax arena, how can it then turn around and argue that any other changes that may benefit low income people, charities, community organisations or the environment are not possible? Could it be that there is one rule for the government's big business mates and one rule for the rest of the community?

While aspects of this bill are commendable, these measures to address avoidance do not go far enough and fail to address some of the most fundamental drains on our national revenue. While the Greens (WA) would not expect one piece of legislation to be able to fix all aspects of tax avoidance, the government is closing its ears and eyes to the really big issue of tax avoidance in this country and, indeed, around the world. Obviously, the tax package put forward by the government could have realistically looked to the future and had the vision to see the realities of taxation in a global economy.

Tax officials have said that the growth of the Internet has made the use of tax havens easier than ever before. It is estimated that billions of dollars are escaping the tax net in this way. Is there any attempt to address this kind of issue? Not a mention.

One of the biggest challenges that faces Australia and the world is the ability of transnational companies, their contractors and their skilled employees to massively avoid tax. This is done by exploiting differences between national tax regimes and by using tax havens such as the Cayman Islands to hide their true financial position from the tax office. Electronic funds transfer is facilitating this massive leak from national tax revenues everywhere. We in this chamber have actually been creating a necessity for electronic transfers more and more because that is what banks want, that is what the big institutions want, and, therefore, it is easier for those institutions to avoid scrutiny.

A government with vision would be talking about the tough decisions that need to be taken to curb this kind of revenue leakage. What is really required is joint international action by governments to pursue transnational companies for tax avoidance. Others in the national arena are making these kinds of noises. It is about transfer pricing. It is about people who charge a lot for the goods they produce in the countries that charge the most tax. They make losses or only scrape even in those countries that charge the most tax, and they save their profits for those countries, or parts of their networks, which charge the least tax.

John Ralston Saul has been drawing attention to the statement recently issued by the Group of Seven in which they basically said they are going to bail out the bankrupt devel oping countries. He points out that the third paragraph contains many statements of interest:

We commit to develop and implement international principles and codes of best practice on fiscal policy, financial and monetary policy, corporate governance and accounting. And to work to ensure private sector institutions comply with new standards of disclosure.

This is a good example of the moves toward joint international regulations—the way of the future that the government is failing to recognise. The Greens have been championing the kind of tax reform that goes to the heart of some of the biggest problems created by globalisation. Positive reforms such as the Tobin tax would assist in regulating the explosion of international financial speculation that acts like a giant vacuum cleaner sucking wealth from everyone around the world and concentrating it in the major financial centres located in the USA, Japan and Europe.

The government are trumpeting the fact that Australia is leading the world in bringing down tariff and non-tariff barriers. They have unilaterally reduced these rates, often to the detriment of many Australian industries and communities, and yet they shy away from being international leaders in progressive policy areas such as the Tobin tax, other international regulations of capital flows or strong stances on human rights on the basis that Australia is just a `middle power'. The Greens would like to see the government starting to talk about and engage in finding solutions to some of these issues.

The second issue I would like to briefly address is the changes to the fringe benefits tax regime. This bill relaxes the FBT regime in relation to small business and taxi travel. The Greens acknowledge that there is a difficult balance to be reached between fairly taxing all relevant income and creating enormous amounts of red tape that become a burden for small business. It is also important that strange anomalies be avoided or minimised in the quest to tax all Australians in a fair and equitable manner.

The position of the Greens (WA) on FBT and cars and parking is well known. In principle, the Greens are not in favour of relaxing FBT for company cars and parking spaces as it encourages people to drive to work and generally use their cars more frequently. It is also an issue in terms of attempting to use economic measures and pricing mechanisms to encourage internalisation of the costs of the use of non-renewable resources.

The use of cars is perhaps one of the most wasteful uses of non-renewable energy in modern society. The environmental and associated health costs of using cars are well documented. There are huge health consequences from the rising levels of air pollution, but the community spends significant amounts of money rectifying or trying to rectify these health effects. Air pollution is a growing problem in our cities and the use of cars is a huge contributor to this increasing pollution. In addition, considering the growing problem of greenhouse gases, the overuse of motor vehicles is an issue that requires urgent attention. What would it mean in reality if we removed the fringe benefits tax on car parking spaces, especially where this is a substantial amount? My feeling is that it may in fact benefit those more wealthy employees for whom this is part of a tax avoidance package.

The Greens have acknowledged that compliance costs for small business is a significant issue. In our taxation platform for the previous election, one of the aims of the Greens (WA) was to reduce compliance costs where they are high, particularly where small and medium size businesses are affected. The issue of compliance costs will certainly be a big issue in the upcoming tax debate when every charity, community organisation and small business will become a mini tax agent for the government.

Indeed, Ray Reagan of the National Tax and Accountants Association has warned today that businesses face a $15 billion start-up cost to meet the introduction of the GST. In addition, he said University of New South Wales research showed the continuing annual cost to small business would run to thousands of dollars, not the $130 which the Howard government claimed. Are we really specifically aiming towards compliance costs for small business? These figures show that it is unlikely that that is the aim of the government.

These issues of red tape versus using the taxation system for positive environmental outcomes are often difficult to reconcile. The Greens do acknowledge the comment of Professor Dixon that the FBT regime may not be the most effective vehicle to attempt to alter behaviour. In the absence of a user friendly transport system, many employees may drive to work any way. If this is so, the reality is that a car park is worth around $2,500 per year—more if it is in Sydney or Melbourne—and is likely to go to the more senior staff, who are likely to be high income earners. These are difficult issues to reconcile. I will be opposing changes to the fringe benefits tax on car parking, and I will discuss this issue in more detail in the committee stage of the bill.

Those companies who have located close to major transport routes, or those who have decentralised and located in areas where it is accessible and where there are not high levels of parking, may well be disadvantaged if we give a specific advantage to those companies who may be using a tax package to bolster the salaries and, therefore, competing unfairly with those companies who are trying hard to do the right thing. As I said, I will talk more about this issue in the committee stage of the bill.