18 November, 2014
The barricades have come down. The thunderous whomp of helicopters no longer echoes overhead. The motorcades of world leaders no longer crowd Brisbane’s streets and their planes have left the tarmac at Brisbane airport. Protestors and demonstrators, having raised their voices peacefully and often creatively, have returned home.
The leaders' communiqué – all three tightly-crafted pages of it – has been released, outlining the work and results of this gathering of some of the world’s most powerful national leaders.
When Micah Challenge began campaigning on tax and transparency, we knew that the Brisbane G20 in 2014 would be a key moment in shaping a global tax system that genuinely worked for the poor and cracked down on multinational tax dodging that robs poor countries of the revenue that they need to reduce poverty. On that score, how do we rate the summit?
First, we are encouraged that G20 leaders acknowledge the nature and scale of the problem of tax dodging and the way it impacts low-income countries. Prime Minister Tony Abbott stated the issue plainly,
We absolutely want companies to pay their fair share of tax and we want them to pay their tax in the jurisdictions where their profits are earned.
It's about the countries of the world, the people of the world receiving the tax benefits that are their due.
It's needed so that governments can fund the infrastructure and the services that people expect and deserve.
Treasurer, Joe Hockey, was perhaps even more blunt,
It’s hugely important for the globe that companies pay tax on their profits. It is theft when someone does not pay the tax due to the nation... It undermines the ability of that nation to be able to deliver the sorts of services that are essential to alleviate poverty.
Second, we welcome the action the G20 has already taken and its commitment to further actions through to the 2015 summit. G20 nations have all agreed to share tax-related information with each other by 2018 and have set up a common standard and mechanism to do this (Automatic Exchange of Tax Information). This will make it harder for people to use offshore accounts and investments to avoid tax, or hide the proceeds of corruption and crime. They've established high level principles for ensuring that more is known about the true owners and beneficiaries of anonymous companies and trusts which should, if fully implemented, make it much harder for the corrupt and the criminal to use shell companies and secrecy structures to hide their ill-gotten gains. Sadly, there is no commitment to developing public registers of beneficial ownership.
We also welcome the commitment of the G20 to better consider the interests of low-income countries and to more fully include them in the process of tackling tax dodging and corruption. Though there is much more to be done on this front. Developing countries have been included in the dialogue to some extent, they may participate on a pilot basis in the automatic exchange of information, and the G20 have plans to support the administrative skills and systems of developing countries' tax systems through "capacity-building".
These are welcome steps forward – albeit some of them are only small steps.
However, we are disappointed that many of the leaders of the G20 are neglecting some of the tools they already have at their disposal to tackle tax dodging and corruption. We also think it is extremely worrying that there is no commitment among G20 leaders to ensure that the information about the true beneficiaries of companies and the structures and activities of multinationals which may be used to avoid tax are made publicly available. Without a strong commitment to making this kind of information public, it is less likely that poor countries will benefit from G20 actions.
The most obvious of the neglected tools is Country-By-Country-Reporting. The OECD has developed a template that would require multinational companies to report on their business activities, structures, assets and tax obligations for every country in which they operate. However, this powerful tool wasn’t even mentioned in the communiqué and only a few countries (notably the UK and France) have made plans to require multinationals to report in this way.
The recent “Luxembourg Leaks” of emails and agreements revealed secret deals among several major multinationals, the international tax advising company PWC, and the Grand Duchy of Luxembourg. These leaked documents have made clear that the cloak of secrecy which surrounds the tax arrangements of multinational companies allows them to deploy massive resources and almost diabolical ingenuity to avoid tax, secure in the knowledge that their actions will almost certainly never be exposed to public or legal scrutiny. Country-by-country reporting would expose these structures and schemes to the light – where questions could be asked about whether they play a legitimate business role or are simply about avoiding tax.
Australia (along with other G20 countries) needs to step up and require country-by-country reporting from multinationals who operate here. By making these reports publicly available, ordinary citizens, NGOs, academics, journalists and others will be able to help examine whether companies are contributing an appropriate share of tax, and also whether governments are doing the right thing by their citizens in the way they relate to businesses and how they make use of revenue from corporate tax. This level of public scrutiny is required to ensure that developing countries are fully able to benefit.
The light is being shone on tax dodging. The G20 continue to take some steps forward. As campaigners, let’s keep the heat on.
Ben Thurley is the Political Engagement Coordinator for Micah Challenge Australia.