When the European Union decided to fine Apple €13.5 billion for tax evasion in Ireland last week, it didn’t take long for the Irish government to join with Apple to announce it would appeal the ruling.
Any change in taxation invariably raises questions about distribution. Who loses, who wins – and who loses most – will always be an issue. However, such analysis should be applied with care, lest it miss the bigger picture.
A long-term plan to cut the company tax rate from 30% to 25% is the centrepiece of the Coalition’s economic plan for jobs and growth. The Coalition maintains the change will boost GDP by more than 1% in the long-term, at a budgetary cost of $48.2 billion over the next 10 years.
During his budget speech, Treasurer Scott Morrison said the phrase “jobs and growth” 13 times. It seems he is not a superstitious man. However, Triskaidekaphobes were not the only ones left with a queer feeling after his speech. Students of the history of tax reform experienced a strange sense of déjà vu.
A tax by any other name is still a cost, as Shakespeare might have said. However, of course, the words we use to describe things can amplify or minimise, and some have greater power than others.
Over the last 50 years, African countries have lost about $1 trillion to illicit financial flows. This equates to around $50 billion a year and is equivalent to all the official development assistance received by the continent over the same period.
Yet again, the recent Welsh assembly election campaign was primarily about how best to spend public money. However, recent developments mean devolved elections in Wales will soon focus on how best to raise public money, too.
Imagine if Australia’s economy was as efficient as Silicon Valley is. It is not that absurd an idea and the keys are potentially at the government’s disposal.
The English tax accountant Richard Murphy has done more than anyone to expose tax havens. Now Murphy says businesses are scared witless of appearing on the front pages and we are seeing a shift in their behaviour, even though there are many battles ahead.
The release of the Panama papers is yet to reach its endgame, but there are some clear truths we can take from it. People or businesses that don’t pay their taxes – whether deliberately or through ignorance – undermine state revenues. They also distort competition by putting the non-compliant at an advantage, and they increase inequality, as it is the better off who more often tend to escape their obligations.
Companies such as drugmaker Pfizer and medical device maker Medtronic that have used a technique called an inversion to reduce their tax bill recently got a smackdown from President Barack Obama:
The so-called Panama Papers span thousands of pages, revealing that many of the world’s elite have been hiding their money in offshore accounts in an attempt to shield their income from taxes. Their release – the biggest data leak in history – depicts a world of rampant tax noncompliance. However, it also reveals just how vulnerable all electronic data in the 21st century are to discovery.
The aim of progressive taxation and the welfare state is to redistribute wealth from the richest to the poorest in an effort to erode the worst aspects of poverty and inequality. How well the British tax and benefits system is doing towards this aim can be seen in the latest, newly released inequality statistics from the Office of National Statistics.
The Australian Taxation Office is reported to be playing a “lead role” in sharing intelligence between tax officials from OECD countries, as part of the continuing fallout from the revelations of the Panama Papers. The Joint International Tax Shelter Information Collaboration, which is chaired by ATO head Chris Jordan, was being convened in Paris overnight, Australian time.
The tax dealings of a number of politicians have come under scrutiny, following news of their offshore holdings in the Panama Papers. The leaks have led to the resignation of the Icelandic prime minister – and the UK Prime Minister, David Cameron, has been criticised for shares he used to have in an offshore fund set up by his late father.
It’s that time of year again: tax-filing season. Millions of Americans are probably downloading the latest version of their tax preparation software as we speak or picking it up at their local software store.