Senate setback offers Coalition an ultimatum on multinational tax changes
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Version 0 of 1. The Turnbull government will be forced to decide whether to insist on shielding big private companies from tax transparency, after the Senate agreed to pass a different Coalition bill only after an amendment to partially wind back recent changes. Related: Australia widens legislation to target more companies for tax avoidance Labor, the Greens and four crossbenchers combined forces to reintroduce disclosure measures on Wednesday during a debate on the government’s bill to clamp down on multinational tax avoidance, setting the scene for an “all or nothing” decision. When the amended multinational bill goes back to the House of Representatives for approval, the Coalition will face a decision about whether to insist on the legislation in its original form or accept the amendments. Rejecting the Senate’s changes could sink the government’s 2015 budget measure to give the Australian tax office greater powers to stop global companies using “artificial or contrived arrangements” to avoid tax obligations. The Coalition’s setback in the Senate on Wednesday follows Labor’s procedural bungle last month, when it did not call for a voting division on the government’s legislation to prevent Australian-owned private companies with annual turnover above $100m from having to publish details about the tax they pay in Australia. The legislation passed the Senate on 15 October. Wednesday’s amendments represent a compromise hammered out by non-government senators. They would reintroduce the Labor-era transparency requirements for big companies, while providing an avenue for firms to apply to the tax commissioner for an exemption on a case-by-case basis. The company would need to convince the commissioner “that to make the information publicly available may be significantly prejudicial to any of the entity’s current or future commercial negotiations”. Significantly, there would not be an exemption available on security grounds, despite claims by some Coalition MPs that publishing revenue and tax details could expose wealthy business owners to kidnapping risks. In September, a Senate inquiry heard the tax office had not approached the federal police over such kidnapping fears. Tax office representatives told the same hearing that about one in five privately owned companies with revenue greater than $100m did not pay any tax in 2014, although they said the reasons varied. The new amendments were moved by the Greens senator Peter Whish-Wilson after protracted negotiations with Labor and crossbench senators, and passed the Senate 32 votes to 29. Whish-Wilson hailed the “great win for tax transparency”. “Companies and wealthy individuals shouldn’t be able to get away with hiding their tax affairs from the public for made up reasons like kidnapping risk,” he said. “The Greens, ALP and crossbench have worked constructively together in the public interest today, while the Liberals were busy trying to protect their big business mates.” The Labor frontbencher Andrew Leigh said the government should quickly pass the amended bill through the lower house if it was serious about ensuring all companies paid their fair share. “The government’s attempts to gut Australia’s tax transparency laws were always wrong-headed and out of step with the kind of transparency Australians expect,” the shadow assistant treasurer said. “In reversing the decision to carve out private firms while adding in valuable safeguards, the Senate has greatly improved the government’s multinational tax bill.” But the assistant treasurer, Kelly O’Dwyer, accused Labor and the Greens of “playing politics” and of delaying the planned crackdown on multinational tax avoidance. “The Australian taxation office has the power to look at all of the financial and tax arrangements of Australian-owned private companies. These amendments will do nothing to increase the ATO’s powers,” she said. “The delay of the multinational tax bill will stop increased penalties for multinationals who flout the law and don’t pay their fair share of tax.” The former Labor government’s tax transparency laws required the tax commissioner to publish the total income, the taxable income or net income, and income tax payable of corporate tax entities with $100m or more in total income. The Coalition’s changes, which passed last month, provided an exemption for Australian-owned private companies, but continued to apply the disclosure requirement for Australian companies listed on the stock exchange and multinationals. Under the Labor-Greens compromise, the commissioner would be required to publish the information, unless a company successfully applied for an exemption on the grounds it would harm commercial negotiations. Related: Labor's shadow boxing with Turnbull distracts from real transparency fight Supporters of the compromise included crossbenchers Glenn Lazarus, Jacqui Lambie, Nick Xenophon and Ricky Muir, while opponents included Dio Wang, Bob Day and David Leyonhjelm. The independent senator John Madigan abstained from the vote on the amendments. The Labor senator Sam Dastyari said the first tax disclosure report would have to be published by the end of the year, giving an unprecedented insight into which big firms were paying their fair share. The publication would be accompanied by a statement warning readers the information may not reflect the company’s full financial position, and would direct people to seek more comprehensive information from the Australian Securities and Investments Commission (Asic), according to the amendment. Xenophon said he had “reluctantly supported” the government’s bill last month because he feared disclosure could harm food processing companies that supplied products to Coles and Woolworths. The South Australian independent senator said he had since learnt that companies with a turnover of $25m or more were required to provide Asic with detailed financial information, which members of the public could obtain for an access fee of $38. “I apologise to the Senate because I did not do my due diligence as I ought to have in relation to that piece of legislation,” Xenophon said. “It’s not as though Coles and Woolies wouldn’t have this information if they wanted to find it out. I think it is stretching it to say those companies would be prejudiced in their commercial dealings with Coles and Woolies.” |