What they said: 2014 – 03

Editorial in The Australian:

At last week’s G20 meeting, delegates agreed to revamp global tax rules to crack down on what accountants are calling a phenomenon of base erosion and profit shifting. There is a wide chasm between outright evasion and modest tax avoidance, but Google’s 0.01 per cent effective company rate is grounds for concern, and undermines public confidence in the tax system. Support for foreign investment is wholly consistent with opposition to extreme tax avoidance. Companies that do not pay their fair share of tax unfairly push the burden on to others.

Editorial in the Australian Financial Review:

As disclosed in the company’s US group accounts last week, News Corp received a cash payment of $882 million from a ‘’foreign tax authority’’ in the second half of last year. On Monday, our journalist Neil Chenoweth revealed that authority to be the Australian Tax Office. The payment resulted from $2 billion in claimed deductions previously disallowed by the ATO before it was over-ruled by the Federal Court in July last year.

The issue concerned paper transactions that allowed News Corp’s Australian subsidiaries to record a $2 billion loss while subsidiaries in tax havens posted a corresponding profit. Tax base erosion from profit shuffling by multinational corporations – especially new media companies such as Google – is a key issue for the G20 finance ministers’ meeting to be chaired by Treasurer Joe Hockey this weekend.

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10 Responses to What they said: 2014 – 03

  1. Rabz

    What sort of idiot “has confidence in the taxation system” in the first place?

    It’s an extortion racket.

  2. eb

    Yes, Sinc. I wonder why the Australian didn’t mention the News Corp ruling?!

  3. lem

    I subscribe to the Kerry Packer school of thought when it comes to tax evasion.

  4. .

    undermines public confidence in the tax system

    Hahaha!

    It does that to itself, much like Paris Hilton, Lindsay Lohan, Amanda Bynes or another imploding starlet..

  5. I share everyone’s hatred of taxation, but that doesn’t mean I’m happy with Google paying less tax than me (or thereabouts). If we don’t like the tax rates, change the tax rates, not applaud those who are able to beat the system.

  6. Driftforge

    1. It’s damnably difficult to evade land tax.
    2. Profit and income are not suitable measures for taxation.

  7. Pedro the Ignorant

    I subscribe to the Kerry Packer school of thought when it comes to tax evasion.

    +1.

  8. Joe

    As others have noted, whilst ever we attempt to tax income, companies will find a way to avoid it.
    Better to tax expense at one flat rate and have companies collect it on behalf of the state. This means that the state would not need to have any documentation of individual finances and thus no way to influence them. Companies cannot avoid the tax because other companies collect their share as they pay for goods and services.

  9. Joe Goodacre

    Things would be so much simpler if we forgot about taxation and relied upon voluntary funding all the way, including courts, police, and military.

    We could drop this entitlement and envy mentality and focus on more productive things.

    Yes it’s a pipe dream, but that doesn’t make it incorrect.

  10. Balatro

    “goanna” was not supporting tax evasion, just paying the minimum he was required to. Only a fool would donate more. Joe is right – the most effective tax is the one where the victims carry the cost of collection – as in the GST. Departure tax at the airport is another.
    Avoidance by profit shifting has been going on for a long time – Howard Hughes was pinged for this by the Feds. Profits from his airline (can’t remember which one, but Hughes flew the super Connies himself), and Universal Pictures were funnelled into Hughes Tool Co. as interest/repayments of loans and offset against “discounted” sale of drilling tools to overseas subsidiaries, which returned local profit back to USA before tax – as a cost, usually a service fee. The service fee was paid to a Hughes company in ( I think) the Virgin Islands.
    Beer Whisperer is right, don’t applaud – these companies are doing what the law allows, and they , like Packer, are not fools. The real fools are the politicians who have for short sighted reasons have allowed this to go on for so long.

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