News & Current Affairs
14 April 2014
Not enough money for welfare?
Then why the amnesty for the richest tax avoiders, Australia?
The Abbott government says that our welfare system is 'unsustainable' while the treasurer is simultaneously backing forgiveness for rich tax cheats. The hypocrisy is staggering
An interesting story appeared in the pages of the Australian Financial Review yesterday that perhaps deserves greater public scrutiny that it has so far received. In light of the Coalition's massive welfare review announced today, it's a piece that illustrates the growing chasm between Australia's richest and poorest, and how far the Abbott government is prepared to protect one at the expense of the other.
The article reports that tax commissioner Chris Jordan is backing a plan to provide a taxation amnesty to extremely wealthy people who have illegally offshored income or assets as a chance for them to avoid jail. The tax advisers of Australia's wealthiest have been lobbying for a "voluntary disclosure" deal from the Australian Taxation Office for some time, the idea being that their clients can pay less than their obligations and go without punishment, rather than continue to deny the tax office its due revenue with the risk of an investigation hanging over their heads.
Source: F. Alvaredo, A. B. Atkinson, T. Piketty and E. Saez, (2013) 'The World Top Incomes Database'
There have been taxation amnesties in the past, of course. Since the last one in 2010, 150 voluntary disclosures from wealthy people yielded $200m in recouped revenue. But while tax advisers themselves speculate that there are actually billions of dollars yet hidden by tax-avoiding rich Australians in offshore tax havens and secret accounts, the plan mooted by Jordan would be the most generous amnesty in Australian history. The targets of the measure are those rich enough to have $30m in net assets under their control, but should they 'fess up to the tax crime of which they are guilty, the new plan would back tax them only for the past four years.
Treasurer Joe Hockey, of course, is understood to back the idea. It seems curious that a man who fostered electoral panic about a supposed budget debt catastrophe is willing to so easily forgive Australia's most wealthy their legally-obliged due share to the nation. Hockey, after all, has been invoking the spectre of a "budget crisis" to justify cuts across the board, from Aboriginal legal services being slashed to the revoked promised pay-rise to childcare and aged care workers, while also keeping single parents firmly docked in the penury the preceding Labor government pushed them into.
The line being run by supporters of the capped-to-four-years plan is that the short-term loss of billions of owed revenue will be made up for by future contributions of the forgiven tax-criminals in the future.
Don't fall for it.What this position blithely ignores that we no longer live in a world where the assets of rich people can easily vanish behind international borders. The amnesty plan appears at the same time global tax authorities are stepping up action to eradicate tax havens. Improved data collection methods, as well as information-sharing agreements negotiated amongst co-operating nations (including the infamously secretive Swiss), have collectively netted the Australian Tax Office more than $1.7bn since they began. Compare the mere $200m collected from the rich in the last taxation amnesty to the more than half-a-billion dollars the tax office recouped via these international exchanges just in 2012-13 alone.
It may seem cynical to assume that the present amnesty is being mooted just to spare the Coalition's super-rich backers a legitimate legal punishment. But with the bleating of Hockey's pre-election "debt crisis" pronouncement still ringing in the electorate's ears, what the hell else could excuse it? The legal and practical means are available to go harder after these people and irrespective of whether there's a debt crisis or a boom looming, basic fairness, justice and the rule of law demands that accounts be raided and assets seized so the Australian nation receives what it is owed.
Irrespective of the financial impacts of the amnesty for tax-cheats, the moral contradictions of the Abbott government are appalling. Abbott has declared of his welfare review that "finally those who deserve welfare will get welfare", but who he believes is deserving and who the Australian people identify as such are likely to be starkly different things. Only yesterday brought news that the government wants the most vulnerable workers in the Australian economy, intellectually disabled employees in managed workshops, to waive their legal rights to a wage claim in return for a one-off payment of backpay. These workers, who are pressured to sign away their legal rights, are currently paid around $1.77 an hour.
That Abbott's government and the likes of Hockey are willing to exploit these people and bellow about "debt crises" at the same time as considering the write-off of billions of tax dollars as a rich indulgence exposes the true character of the new Coalition government.
The situation reveals that either Hockey is a great obfuscator and that the "debt crisis" is a furphy being used to justify some sick ideological punishment of the poor for being poor, or that the comfort and convenience of the very rich takes precedent over any considerations of the nation's best interest. Or maybe it's both - and that's the most terrifying conclusion to draw should this tax amnesty go ahead. Australia is not merely being lied to, we're being robbed as well.