At the inquiry into tax avoidance back in April, senior executives of Apple, Google and Microsoft did nothing but toy with federal government senators. The inquiry was a travesty, really, with the corporate wallahs brazenly refusing to answer questions about the use of ‘Double Dutch Irish Sandwiches’ and ‘Singapore Slings’ (supposedly corporate euphemisms for tax-avoidance schemes). Television news coverage of the proceedings showed the inquiring senators, led by Labor’s Sam Dastyari, looking cross and bamboozled.
Yet, according to a Sydney Morning Herald leader from May, McDonald’s has avoided paying half a billion dollars in tax over five years by shifting profits through the low-tax nation of Singapore.
The SMH also noted that although BHP Billiton, Rio Tinto and Glencore are currently under tax audit for sending hundreds of millions of dollars through ‘Singapore hubs’, this may result in the mining giants gathering their forces – taxation lawyers and accounting experts – to challenge any assessment through the courts.
It’s been reported that the largest 900 Australian companies save $25 billion a year through a range of tax exemptions and write-offs for research and development. As Fairfax pointed out, this ‘sum would wipe out two thirds of the current deficit at a stroke’. So why are our politicians and bureaucrats so easily outwitted by the multi-nationals? If the corporations are taking advantage of loopholes in the law, why haven’t those loopholes be closed by our lawmakers, the Australian government?
In the meantime, Prime Minister Tony Abbott has announced the appointment of a senior police officer to head a crackdown on welfare cheats. Incredibly, in view of the cockup of the tax avoidance hearings, he was quoted on the ABC as saying: ‘People (welfare recipients) are not being upfront about their income, so it’s important that we ensure that people are being straight with us.’
Yet when she appeared recently on ABC’s The Drum, the CEO of the Australian Council of Social Service, Cassandra Goldie, reported that welfare fraud in Australian is ‘very, very low’.
The Opposition Leader, Bill Shorten, did not take the opportunity to quote Centrelink figures in support of Cassandra Goldie’s claim. Instead, he seemed to be tacitly condoning the need for a crackdown. He was widely quoted as noting that ‘welfare cheats give everyone legitimately receiving assistance a bad name’.
Down the decades both Labor and the Coalition, anxious to gain the votes of ‘working families’, have cynically perpetuated the widespread belief that welfare fraud is rife.
But president of the National Welfare Rights Network, Kate Beaumont, advises that during the 2013–14 financial year, just over a thousand people were referred by Centrelink to the Commonwealth Director of Public Prosecution for potential prosecution for fraud. She pointed out this is a small proportion (0.02 per cent) of the 7.3 million people receiving Centrelink payments.
She urged the federal government not to add to the confusion about Centrelink overpayments. ‘Very few overpayments are caused by intentional fraud,’ she insisted. ‘We do not condone fraud in any form.’ Beaumont questioned whether the government’s crackdown on fraud truly would result in an estimated $1.7 billion dollars’ worth of savings over the next five years.
Yet it seems likely that as a result of the crackdown, thousands of Centrelink customers will be subjected to the trauma of a Centrelink review. This may begin when a customer receives a demand, out of the blue, for the provision of pay slips, tax returns and bank and credit card statements dating back months or even years. Too bad if you don’t have these documents on hand or the cash to get copies you’ll need! These days, most banks charge for back statements and Centrelink advises that its customers are responsible for accountancy and other costs they may incur.
Centrelink is legally entitled to seek information about its customers from third parties, including employers, but, generally, it undertakes to do so ‘only if it has to’. Yet there have been documented complaints of this undertaking being breached without notice.
A Centrelink request to an employer about an employee may result in that employer becoming doubtful about the worker or just fed up with more bureaucracy. The upshot may be loss of hard-won employment for innocent Centrelink customers.
Demands for documents usually come with the threat that social security payments will be cut off if the information is not provided before the expiry of a given 14-day deadline.
Why is it that alleged tax avoiders are not treated with such draconian severity?