As with many other Christians, after attending church on Christmas Day my family gathered together and celebrated God’s gift to humanity in Christ over a shared a meal we'd each prepared in our own homes.
The shared meal is something that comes to humans naturally. We pool our resources so that the small efforts of individuals can achieve much more in a communal activity. It is something that humans have been doing since the very beginning of time.
The pooling of resources to achieve greater things is an active philosophy which holds our society together. Proof of this can be seen through the sharing of our wealth, pooled to construct things which we individually cannot achieve. Few of us could construct the road in front of our homes on our own, or the electricity that is carried over kilometres of wires, let alone the mind boggling infrastructure that sits behind the screen and information highway that we are reading this blog on. To achieve all these amazing services and more, wealth is accumulated in corporations which we buy into or by our Government, which we elect, and spent for the greater good.
The scriptural message calls for taxes to be paid to just authorities who benefit the greater good (Romans 13:6). We see the benefits of sharing our resources through the wealthy nation that Australia is today. Through tax taken from the community and used by the Government it is spend for our benefit, this includes infrastructure and domestic welfare, as well as development for those who are most in need delivered through the vehicle of Australian aid.
As we work we pay tax, as we purchase products we pay tax, as our small businesses provide services we pay tax. It is therefore right to assume that fairness exists in the system in which we all share a part. However this is not always the case.
Just before Christmas the Australian Tax Office released an entity-by-entity listing of corporations whose income exceeded $100 million for the 2013-14 financial year. These records were only for public and foreign companies which did business in Australia and numbered over 1,500 entities.
What is shocking in this incredible release of information is the vast majority of these entities paid little to no tax. Thats right, no tax. The full list is available here.
Graph: Entity level reporting of tax payable in the 2013-2014 financial year. Source: ATO.
Sure, there are legal reasons for some companies paying no tax which include paying off losses and legitimate depreciation mechanisms, but if companies which are turning over billions of dollars in profit are paying less dollars in tax than the lowest income earners, surely we have a right to question if this mechanism in our system is working.
These corporations, many of which are overseas owned and run, can report profits in regions, countries or internationally. By reporting profits in a number of countries and spreading there losses, they have the ability to lower the tax threshold and real amount payable. While zero tax payable does not necessarily equal tax avoidance the fact that half these entities are or have been subject to reviews by the Australian Tax Office speaks volumes as to the reality we now face. It may all be legal but the question we should ask is: is it fair?
Tax avoidance has a two-fold effect on those who are most in need. By lowering the amount of tax which comes into the Australian economy the amount of money which is dedicated to our aid program is lower - the cuts made to the budget in the effort to move towards surplus therefore affect those who are most in need because more of the ‘cake’ doesn't even make it into the ‘tin’. Tax avoidance also affects the poorest communities in the world as companies fail to pay their fair share of tax in the developing countries in which they operate.
Micah has consistently called for tax fairness including country-by-country reporting so that the full picture of corporate tax can be released. If there are overseas companies that have paid little to no tax in Australia, we can only assume the measures taken by infrastructure, healthcare, education and other government services which would help fight poverty. Country-by-country reporting would enable Governments around the world to investigate corporations' full financial situations and show if there has been significant moves of capital to developing nations in the effort to avoid tax.
Like our family meals over the holidays where we individually came together and pooled our resources, we need to ensure that everyone who is in the system carries their fair weight. The complexity of overcoming tax avoidance is certainly great, but even more colossal would be the impact of changes in the tax system for the global poor. As such, Micah is committed to continue campaigning on tax and transparency in 2016 and we hope you will join us as we speak out for justice in the global tax system.
Benn Banasik is the Political Engagement and Campaign Coordinator of Micah Australia.