Can Australia fix its public finances if those evil big businesses paid their fair share of tax?

I doubt there are any, but if there are any regular readers of this crazy blog, they will know I have for many years screamed at the argument that Australia can fix its public finances if only those evil big businesses paid their fair share of tax.

And yes, I have been gloating that this argument started to crumble when the Commissioner early last year stated that the underpayment of tax by these businesses was only $2.4 billion a year. Remember that the underpayment of tax by salary and wage earners due to dodgy deductions or undeclared cash payments is $8.7 billion a year.

But it just keeps getting better…

Remember that the “large corporate group income tax gap” is the difference between the total amount of income tax collected and the amount the Commissioner estimates he would have been collected if every one of these taxpayers was fully compliant. And while the tax gap for salary and wage earners is mostly dodgy deductions ($7.3 billion a year underpayment of tax due to these), the “large corporate group income tax gap” primarily reflects differences in the interpretation of complex areas of tax law.

Have a look at what has been happening to this gap, while the salary and wage earner gap just keeps increasing…

Screen Shot 2018-12-15 at 3.12.31 pm

Screen Shot 2018-12-15 at 3.12.38 pm

The income tax gap for these large corporates is going down. And there is no wonder why. The multinational anti avoidance law, the diverted profits tax, country by country reporting, hybrid changes…

But watch the number of lobbyists and politicians, wanting money from a new government after the May election, saying that it all can be funded by making those evil big businesses pay their fair share of tax, which they already do…

But no one will dream about addressing the issue that is almost 500% bigger – salary and wage earners and their dodgy deductions.

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About Ken Mansell

As a stay at home Dad most of the week this is my way of pretending I am still the tax counsel of ASX and SEC listed companies, working at big 4 firms, working at the Federal Treasury, on the Henry Review and at Parliament House for the previous government.
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One Response to Can Australia fix its public finances if those evil big businesses paid their fair share of tax?

  1. Joshua Brown says:

    Regular reader here Ken, its good to see somebody write in a humorous fashion about tax. Keep up the good work.

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