Labor multinational tax crackdown to claw back $1.9b
Labor expects to raise almost $1.5 billion over the forward estimates by limiting debt-related deductions by multinational firms to 30 per cent of their profits. This follows ongoing concerns about companies moving high interest debt between their international subsidiaries so as to effectively wipe out their tax liabilities.
About 600 companies are expected to be caught up in this measure.
Almost $500 million is forecast to come from limiting the “abuse” of tax treaties when holding intellectual property in tax havens. Another 100 businesses are forecast to be affected by this policy.
Big Tech companies including Meta and Apple did not want to comment on the policy, while Google was also contacted for comment.
Labor is also promising new transparency measures around reporting requirements including beneficial ownership, tax haven exposure and connections to government tenders.
Another $3 billion is expected to be raised by “sensible and staged savings” from outsourcing arrangements.
About $500 million of those savings have already been spent, with Labor committing an extra 1080 frontline staff for Services Australia, the Department of Veterans’ Affairs and the NDIS.
While announcing some expenditure measures, Labor said it would outline all of its proposals ahead of polling day.
Finance Minister Simon Birmingham said the plan was not even “remotely credible” as Labor was not forecasting how much the economy would grow, how many jobs would be created or by how much wages would rise.
He said the $5 billion in extra tax and cuts to consultancies was not enough to cover Labor’s own $5.4 billion childcare policy.
“Anthony Albanese needs to come clean on what further cuts are on the cards or which taxes they will raise to pay for their election spending promises,” he said.
“Labor’s claimed savings on contractors are as likely to happen as Anthony Albanese is to fly to the moon. The idea that Labor will uncap public service numbers but somehow end up with a saving by spending less on contractors is fanciful.”
The Coalition has attacked Labor for not adopting its 23.9 per cent tax cap that was introduced by Scott Morrison. No government since John Howard in 2004-05 has breached the cap.
Chalmers and Gallagher said the tax cap reflected an assumption that governments would return bracket creep to taxpayers when financial circumstances allowed.
They said this would also guide their approach to tax cuts
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