For years now, organisations like the Tax Justice Network and various news outlets have screamed about how evil multinationals and large corporates are regarding avoiding tax. The explain the utopia we could live in if they were required to pay the tax the law states they should pay.
The ATO estimates the 2015-16 income tax gap for the small business sector to be approximately 12.5%, or $11.1 billion, with over $7 billion (or over 64% of the total value of the gap) being attributed to black economy behaviour.
The ATO has previously released the net income tax gap for large corporates, estimated at 4.4 per cent or $1.8 billion in 2015-16, and the net income tax gap for individuals not-in-business for 2014-15, is estimated at 6.4 per cent, or $8.7 billion.
In summary, as I am sure they will need to read this twice…
- Large corporates avoid $1.8 billion a year through non compliance with the tax laws, which is 4.4% of all the tax they should pay.
- Individuals not in business avoid $8.7 billion a year through non compliance with the tax laws, which is 6.4% of all the tax they should pay.
- But coming in first place by a country mile are small businesses who avoid $11.1 billion a year through non compliance with the tax laws, which is 12.5% of all the tax they should pay.
And if you want to consider this on a worldwide basis, this looks bad…
Small business tax gaps that have been released overseas range from 9% to 30%.
So the next time someone wants to fund some amazing new Government program and tells you they want to do it through fixing “large corporate tax avoidance”, let them know that large corporates are by far the most compliant taxpayers in Australia and that the evil taxpayers in this country (and in many other countries) are small business owners and workers.