Offshore No More
It is a strange twist of fate when one’s study of Corporate Law suddenly becomes applicable and vital to understanding the latest Australian Budget.
Or perhaps it is a re ection of the now infamous ‘Panama Papers’ and the impact this has had on the shaping of the 2016 Budget. The Panama Papers became a worldwide phe- nomenon when papers were leaked from the legal rm Mossack Fonseca in the titular country. The papers implicated some of the world’s wealthiest in tax avoidance schemes, whereby ‘shell companies’ were set up to harbour funds by shifting large amounts of money to tax havens, like Panama and Monaco. In what seems to be a fantastic irony in today’s world, the most elite are so practiced at systematically undermining taxation schemes, thereby reducing their overall impact. For when less taxpayer money exists, the funding of infrastructure, schools and hospitals, and so forth, becomes less feasible.
In response to this, Treasurer Scott Morrison announced in the 2016 Australian Budget a new regulatory scheme to tackle tax avoidance. In a move in uenced by the UK’s ‘Google Tax’, Australian companies caught transferring pro ts off shore will face a penalty rate of 40% as opposed to the ordinary 30%. This will target multinational corporations and wealthy individuals with a team of 1000 tax avoidance specialistsat the Australian Taxation Office. Although this move seems completely necessary given the current climate of taxation scrutiny following Panama, the tax is also a fundamentally passive political move. Rather than delving into serious policy reform, it seems the Budget is reflecting nothing more than a likeable policy move to win the Australian public.
With the Federal Election coming up this winter, it is clear this government has an ulterior motive in presenting such reforms. The Budget introduced agreeable reforms to keep the every-day vote appeased. In targeting large multinational corporations and elite individuals, the Budget sought conservative ways to justify tax cuts. It is questionable how the Australian public will receive these proposals, with many of them toeing the line between conservative and passive too significantly to shift public opinion in any way. If the government is genuine about taking a stand against tax avoidance by the elite, they need more serious policy reform than the creation of a taskforce. Otherwise, this will remain to appear as merely an appeal to working class Australians.