A report commissioned by the Australian union United Voice and conducted by Roman Lanis, a senior lecturer in accounting and tax at the University of Technology Sydney, has revealed the Westfield Group’s annual average effective tax rate in the nine years to 31 December 2013 was only eight per cent.
David O’Byrne, acting national secretary of United Voice said that given the huge amount of tax revenue involved, addressing corporate tax avoidance should be an urgent priority of the Abbott government.
“Tax avoidance may not be illegal, but we believe it is immoral and never more than today when low income earners are facing a Budget of across-the-board cutbacks. While some corporations are paying their tax, there are others who simply look to exploit any loophole they can," he said.
The government must get its priorities right and cannot allow wholesale corporate tax avoidance to continue, Mr O’Byrne said.
United Voice has called for a major inquiry by the federal government looking at Australia’s corporate tax structure, closing tax loopholes such as stapled securities and tax havens, and increasing transparency and disclosure by corporations.
“The prime minister and treasurer have talked tough about corporate tax dodgers. Now it’s time to act,” said Mr O’Byrne.
However, Tony Greco, the Institute of Public Accountants’ (IPA's) general manager for technical policy, told AccountantsDaily that a federal government inquiry would be limited in what it could achieve given the type of tax avoidance raised by United Voice typically utilises cross-border tax rules.
While it is clear that multinationals are not paying their fair share of tax, it’s an issue that must be addressed on an international basis, according to Mr Greco.
“If a country like Australia was to address the problem alone then you'd end up with what we call tax trade wars and it wouldn’t work fairly,” he said.
“You would end up with a horrible situation where everyone was trying to tax the same profit in multiple locations around the world.
“I’m not saying what we have now is ideal – essentially what is happening now is that some of these large multinationals are able to effectively avoid paying tax – but you don’t want to go from that to it being taxed multiple times,” Mr Greco said.