At ANZ’s Annual General Meeting in December last year, chairperson David Gonski asked why any corporation would stay in Australia where they are taxed "so highly" in comparison to other countries?
The response to this is that companies should be made to pay even more tax, and those which pay none should be made to pay. More than one third of large public and private companies paid no tax in 2014-15.
Currently, companies in Australia are taxed at 30%. US president Donald Trump announced that he will reduce company tax to 15% and other countries are following this trend. Britain is proposing to reduce company tax from 20% to 17%. In Australia, the corporate push to reduce tax is heating up.
The federal government is proposing to cut corporate tax to 25%. Economists, bankers and some academics are also advocating reductions in corporate tax. Their main argument is that new investment in Australia depends on having an attractive tax rate.
With companies in countries such as Lichtenstein and Ireland taxed at 12.5%, they argue that Australia will fall behind in economic competitiveness. Tax haven countries with absolutely no corporate tax at all, such as Bermuda, Cayman Islands and the British Virgin Islands, seem to be the model for countries to aspire to.
Attracting foreign investment and ensuring that existing companies keep their investments in Australia are the key arguments put forth by economists.
It is an argument that goes right to the heart of capitalist doctrine, which teaches that success in the global marketplace is dependent on attracting big business and multinationals to invest their money. More money coming in apparently leads to more jobs and more revenue for the government.
Statistics from the Department of Foreign Affairs show that foreign investment has risen from 30% of GDP to 150% over the past 30 years.
However, if increased foreign investment is meant to benefit society, then why has the gap in inequality continued to rise? Why has wage growth continued to decline? Why are jobs getting harder to find? Why is job casualisation increasing? Why are jobs continuing to be outsourced to cheaper Third World countries? Why is housing completely unaffordable?
The problem is that companies invest purely for a return on their investment. They are driven by their profit motive that has no regard for the consequences and effects of their actions on workers or the environment.
Attracting foreign capital can generate jobs but not in a sustainable manner. Neither will the investment be directed to where social or environmental need is greatest.
Even worse, when foreign capital is used to purchase public assets, the country is vulnerable to being exploited by the highest bidder.
Rather than reduce the corporate tax rate, big businesses and multinationals need to pay more. They need to pay back all the taxes they have been avoiding due to tax concessions from the government or through use of offshore tax havens. They need to be more regulated and made to pay higher taxes and royalties on the huge profits they make at our expense.
Ultimately, they need to be put under the democratic control of workers and society.
We can only do this through building a movement to replace capitalism. You can help build this movement by supporting Green Left Weekly in getting its anti-capitalist message out each week.
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