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Tuesday, 20 June 2017
Page: 4299


Senator GALLAGHER (Australian Capital TerritoryManager of Opposition Business in the Senate) (12:37): I rise to speak in support of the Treasury Laws Amendment (GST Integrity) Bill 2017. The bill amends the A New Tax System (Good and Services) Act 1999 to address exploitation of the goods and services tax law as it relates to precious metals. The bill introduces a mandatory reverse charge for taxable supplies between suppliers and purchasers of gold, silver and platinum. This removes the opportunity for the purchaser to make fraudulent input tax credit claims and for the supplier to avoid paying goods and services tax to the Commissioner of Taxation by liquidating. These amendments also establish a framework for parties to voluntarily reverse charge suppliers of such precious metals whether or not they are required to under the GST law.

The bill also clarifies the GST law to ensure that entities cannot exploit the special tax treatment for second-hand goods to claim input tax credits by changing the form of a precious metal. This ensures that input tax credits cannot be claimed for acquisitions of valuable metals in situations inconsistent with the policy underpinning the second-hand goods rule.

Labor supports measures that strengthen the integrity of the tax system and that ensure the tax system operates as intended. Tax evasion and avoidance by multinational companies threaten Australia's tax base. When tax loopholes are exploited by multinational companies, Australians ultimately have to either pay higher taxes or suffer cuts to vital services.

I have to say, Madame Deputy President, that this is one of those issues that come up all the time when I am talking to constituents. The vast majority of Australians pay a decent amount of tax and, when they see and read articles around high-wealth individuals and large multinational companies making large profits, and read that they are not paying or are minimising or avoiding their tax payments to Australia, it really causes a lot of distress, particularly when we have got the budget in the state that it is in. All revenue that goes into consolidated revenue is important in maintaining services, in paying for services and in making sure that people get the support they need without further cuts to services.

Labor has always taken the issue of tax avoidance and tax evasion very seriously, and I would point out that the previous Labor government began the task of tightening loopholes, including implementing the Tax Laws Amendment (Cross-Border Transfer Pricing) Bill (No. 1) back in 2012, so some five years ago, that was integral to the recent Australian tax office victory over Chevron. It is unfortunately to the government's shame that, in opposition, the coalition voted against Labor's measures to reduce multinational tax avoidance and in government have failed to take any serious action on this problem.

In 2015, Labor announced a comprehensive multinational tax package, which I could probably go through in detail, which focused on closing down debt deduction loopholes. This is part of Labor's view that we need to ensure that people pay the right amount of tax. Those tax receipts are then used by government in the provision of services to the Australian community. Labor has always prioritised this and we have been doing a lot of policy work from opposition to make sure that the policy settings are right, that people are paying the right tax, that we do not have massive loopholes that allow multinational companies to basically evade or avoid paying the right amount of tax.

While governments around the world are taking steps to shut down corporations' ability to inflate their debt deductions to minimise tax, this government have refused to back Labor's package or take any action. They simply will not act. We all know that tax havens threaten Australia's tax base, and that for every dollar lost to a tax haven, a taxpayer either has to pick up the tab or essential services like health and education have to be cut. We see that both in the debates we are having in this chamber today and with the release of the budget over the last few months. Those critical services like health and education do take up large amounts of the Commonwealth budget for good reason. I think if you asked people, health and education are priority issues. Health, education and the economy are usually Nos 1, 2 and 3 along with things like national security, and will be the top issues when you are out and about talking with people. We will have some disagreements on that later of the week in the week, particularly about education, it appears. People want these services funded appropriately and they can only be funded appropriately if our tax system does not have loopholes that can be driven through, if the policy settings are right and if everyone in this community—from businesses to individuals to households—contribute to the common good. That would allow those vital services like health and education that matter to every single household in Australia to be funded appropriately. Every dollar lost to a tax haven, a taxpayer pays the price; they pick up the tab, or we face cuts to the budget or cuts to service delivery.

Certainly the shockwaves from the Panama papers and similar scandals involving corporations and high-net-worth individuals aggressively minimising their tax are not issues just faced by Australia but they are issues that are being faced by countries right around the world. We would argue on this side of the chamber that not enough has been done to address the aggressive minimising of tax. What we are seeing is continued rising inequality, rising government debt, a significant structural deficit to the budget. At the same time, if you open the paper on any day of the week, you will read a story about some high-end tax avoidance scheme that has been going on.

We know that it is those on lower, modest and average incomes who pay the price for this, with most households having to cover the cost of aggressive tax-minimising regimes. In opposition, the government voted against Labor's measures to reduce multinational tax avoidance. We would argue that in government they have failed to take serious action on this.

I will just reflect in my speech for a short amount of time around what Labor would do to improve the bottom line and to make sure that we are tightening those multinational rorts. Back in May, Labor announced a whole series of initiatives—that we hope the government looks at—that certainly form part of our policy and would improve the bottom line by $5.4 billion over the decade through reforms to ensure that multinational companies no longer are given a free pass to use the Liberals' tax loopholes. Labor's five-point plan would restore integrity to the Australian tax system through stronger laws which would close those loopholes and increase tax scrutiny.

There are five measures to Labor's package, which we have called Their Fair Share. It includes tightening the debt deduction loopholes used by multinational companies, improving the budget by $4.6 billion over the year; increasing compliance activity by the Australian Taxation Office; removing tax advantages and inconsistencies between multi-entry consolidated groups and Australian-owned ordinary consolidated groups; delivering more tax transparency by restoring Labor's $100 million threshold for public reporting of tax data for private companies—this threshold was raised to $200 million in another deal with the Liberals and the Greens political party; and appointing a community sector representative to the Board of Taxation to ensure that community sector voices are heard in the design of tax arrangements and review processes.

As I said earlier in my speech, Labor's laws helped to deliver a victory to the Australian Taxation Office against Chevron. They were laws that were passed back in 2012, which the government voted against at that time. Whilst in this budget we see an attempt by the government to continue with their handout to big business and the banks, with their $65 billion tax cut to those at the big end of town, we would argue that they should have a look at our policy as outlined and stand up and fight for those Australian workers and businesses who do pay their fair share—or sit by as the budget revenue and those dollars slip away.

There is an opportunity straightaway to improve the budget by $5.4 billion over a decade through some straightforward reforms that the government could adopt. They certainly form part of Labor's policy. We have been doing the work, whether that has been in Senate committees or the policy work that is being led by the shadow Assistant Treasurer, the member for Fenner, Dr Andrew Leigh. They are a series of policy initiatives that the government could adopt to address some of the issues around how everyday, ordinary Australians feel ripped off when they are paying the right amount of tax: close those loopholes for multinationals, millionaires and those that can afford to aggressively minimise, avoid or evade paying the right amount of tax.

In conclusion, Labor will support this bill. We do support measures to ensure the integrity of the tax system. We do support measures that clamp down on people who use those current loopholes to their own benefit at the cost of the community. This is a bill that seeks to do that; however, we do believe that the government could be doing a lot more. We do believe that they could take this issue seriously, adopt some of the policies that we have put out, improve the budget at the same time and deal with maintaining key services for the Australian community by making people pay their fair share and do the right thing. It is not hard; it is not rocket science to ensure that people pay the right amount of tax and that services can continue to be delivered at the same time that you are dealing with budget repair. Were the government to choose to take that path, the Labor Party would happily support them in it. Certainly, in relation to this bill, we are happy to support it in this instance, but we would like the government to be doing a lot more in this space.