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	Tax Dodgers Sans Frontières by Mike Seccombe The Gloabl Mail & agencies   July 2013   There are about 240 Australian mining companies with operations in Africa. The advocacy group ActionAid claims poor countries are losing more than $130 billion in tax revenues a year by giving generous tax breaks to big companies, including some Australian miners. "We know Australian miners are benefiting from these deals," said Mark Chenery, head of campaigns at ActionAid Australia.   "In most cases, these are backroom deals signed directly with politicians with little or no parliamentary scrutiny."   A Perth-based uranium miner, Paladin Energy, has come under scrutiny for its tax arrangements in Malawi, where it runs a mine in Karonga.   A report by Norwegian Church Aid alleges there are discrepancies between Paladin"s reported tax and its tax paid.   It also alleges other payments by Paladin in Malawi are lower than the company reports. Paladin has subsidiaries registered in Mauritius and the British Virgin Islands, both tax havens. Its 2012 annual report shows the company has accumulated losses that mean it will need to make profits totalling $208 million in Australia before paying any tax.   Development groups are calling for Australia to introduce disclosure laws that would force companies to report what they pay governments in every country in which they operate. Such laws have now been passed in the US, European Union and Canada.   Last week, the tax office launched a taskforce to investigate suspicious ownership structures of Australia"s biggest companies. It said it would work closely with international partners to establish the purpose of Australian businesses in low-tax jurisdictions and issue multi-country audits.   The Australian Tax Office has flagged it will open 60 cases of suspected tax dodging by Australian and international companies amid global pressure to crack down on profit shifting. The investigations will add to the 26 cases of offshore restructuring already under review.   The government"s long overdue effort to begin to make a legitimate effort to crack down on corporate tax cheats comes as the OECD, non-government organisations and the African Development Bank call for greater transparency in multinational resources companies operating in poor countries.   Tax Dodgers Sans Frontières, by Mike Seccombe. (The Global Mail)   Would you call it a war? There are no bullets, but the conflict bears other hallmarks of war. It involves a threat to national sovereignty. And it is fought at huge human cost – in lives impoverished or cut short by lack of access to food, health services and infrastructure that governments cannot provide for their citizenry because they have been cheated of trillions of dollars.   Trillions? With a “T”, as in millions of millions? Perhaps you think I exaggerate.   Then hear this, from Edward Kleinbard, a Professor of Law at the University of Southern California (USC), and former Chief of Staff of the US Congress’s Joint Committee on Taxation.   Because of an anomaly in US tax law, which requires that companies report their holdings in offshore tax havens, says Kleinbard, “we can say with some precision that US firms have about $2 trillion today in offshore, unrepatriated, low-tax earnings.   “Now, not all that $2 trillion is cash; some is invested in real subsidiaries doing real things, but about 40 per cent is cash,” Kleinbard told The Global Mail.   To give some idea of the magnitude of this corporate stash of money, consider that the gross domestic product of Australia is only about $1.5 trillion.   “All the multinationals are doing it,” says Kleinbard, who later corrects himself, saying maybe 70 per cent of the biggest US corporations do it. “The other 30 should fire their tax directors.”   And Australia is the 12th largest national economy in the world.   Furthermore, says Kleinbard: “Other [non-US] multinationals would have proportionately just as much super-low-taxed or untaxed income. It’s just that because of US tax rules, the extent to which US firms do it is more visible.”   Given that the US economy these days makes up about one-quarter of the global economy, you might well multiply that number by four. Given that the US has one of the more meticulous tax regimes, you might well multiply it by much more. Some estimates place the global total that multinationals have stashed away in tax havens at around US$20 trillion.   But no one knows for sure. “I think [calculating it] is an impossible exercise,” says Professor Jason Sharman of Griffith University, who, over a decade of studying the subject, has seen a wide spread of estimates of the scope of corporate tax avoidance.   Whatever the true number, though, it’s huge and growing fast. It’s big enough that the Organisation for Economic Co-operation and Development (OECD), in a recent report on the subject (page 8), warned: “What is at stake is the integrity of the corporate income tax.”   Kleinbard is not an expert on Australia’s biggest corporations, but if he’s right and it’s a universal problem, one might expect them to similarly make use of tax havens – perhaps even to a greater degree, given that Australia is proportionately a bigger trading economy.   And sure enough, most of them do have subsidiaries in tax havens or, as they are more precisely called by people who look into these things, “secrecy jurisdictions”.   In all, 61 of Australia’s top 100 companies have active subsidiaries in secrecy jurisdictions, according to a comprehensive recent investigation by the Justice and International Mission of the Uniting Church.   The ASX 100 includes 61 Australian companies that maintain 686 subsidiaries in ‘secrecy jurisdictions’, according to a recent Uniting Church report.   The Justice and International Mission is, as their name implies, concerned with social justice. If the Australian Treasury is being diddled of several billion dollars a year in corporate tax – which is their best guess – then that means the tax burden falls more heavily on others less able to pay. It means less for government to spend meeting the needs of its citizens.   So, which companies have subsidiaries in secrecy jurisdictions?   All of Australia’s big four banks have them, in varying measure. The Commonwealth Bank has eight, Westpac five, ANZ four and National Australia Bank just one.   Other big companies have many more. AMP has 15, Computershare, 18. Telstra has 19, Downer EDI, 32; Toll Holdings, 64; Goodman group, 67 – and way out ahead of the pack is Rupert Murdoch’s News Corp, which has 146..   Multinational corporations – some of them financial entities larger than middle-sized nation states – now move production to where labour and other input costs are cheaper, claim research costs where the R&D incentives are greatest, and declare their profits where the corporate taxes are lowest.   Like we said before, for a long time policy-makers in developed nations didn’t care much about what “their” multinationals did overseas. Quite suddenly, though, they are coming to realise these companies are not theirs anymore.   They are citizens of the world, generating ever-increasing amounts of what USC’s Prof. Edward Kleinbard calls “stateless income”, laundered through some secrecy jurisdiction or other.   Today, stateless corporations, not stateless people, are the real threat to “border security” in the world.
	The politics of class warfare: from Sydney to Washington, the gulf is deepening by Per Capita, Guardian & agencies Australia   The politics of class warfare: from Sydney to Washington, the gulf is deepening, by Josh Bornstein.   I am not sure exactly when it happened, but at some point I realised life had increasingly come to resemble a long-haul flight. Goods and services began to be increasingly tiered to target the well-off and sold at different prices, like seats on a plane. First class travellers sit up the pointy end of aeroplanes with plenty of space, comfort and fine food and are able to avoid long queues, including those that develop outside in-flight toilets. Towards the back, people are moulded into unsuitably confined spaces.   This isn"t limited to plane journeys, of course. Take a universal constituent part of the human condition: our distaste for waiting in a queue. In the US, a market has emerged for the services of homeless people who are paid to wait in lines on behalf of lobbyists seeking access to congressional hearings. The time-poor wealthy pay the time-rich poor to wait in queues.   And remember when luxury cinema viewing, such as Gold Class, first appeared? Instead of sitting in the democracy of a cinema, this too was a premium service offering space, comfort and exclusivity – even if trying to eat a choc top washed down by a glass of Merlot while reclining in a furry chaise longue was not as special as it may have seemed at first blush. Likewise, in recent years, premium transport services have emerged offering luxury cars and personalised relationships to transport clientele. Even psychologists have got into the act, metamorphosing into "executive coaches" and in the process tripling their hourly rate.   In Australia, the economic transformation wrought by 22 consecutive years of economic growth and an unprecedented mining boom has played a crucial part in these changes, generating enormous prosperity. Entrepreneurs have increasingly tiered their business offerings to target this wealth.   Australia is now one of the wealthiest countries in the world, vying with Switzerland and Norway to head the league table on various measures of wealth and wellbeing. But all this prosperity has been rather unevenly distributed. The incomes of our top 1% have far outperformed the rest of the population, just as they have done in other economies like Canada and the US. Between 1994-2008, the wealthiest 10% of Australian households enjoyed the highest increase in incomes of any advanced economy.   The profit share of economic growth rests at a record high. This means that the share apportioned to the wages of the labour force sits at a record low. It has not always been like this. Between 1900 and the 1970s, income inequality actually reduced. Since then, it has made a rapid about-face. According to the Australian Council Of Social Services, over 2m of Australians live below the poverty line. Half of all Australian families live on a pre-tax income of $77,000 or less.   You can drown in data measuring inequality, but just as much can be revealed by examining our culture and politics and increasingly our interactions with each other.   The US has a peculiar obsession with the right to bear increasingly lethal weapons. In Australia, the obsession is with private schools. 35% percent of our students now attend them. This compares with class-riddled Britain (10%) and the average across OECD countries (17%). Some 60 years after then prime minister, Robert Menzies, first decided to equally fund students in both government and non-government schools, educational inequality has become entrenched.   When the head of an exclusive Melbourne private school for girls challenged her sacking in September 2012, we got a rare insight into the transformation of Australian education and the passions of the contemporary middle class. Rosa Storelli, the principal of Methodist Ladies College, was fired after questions were raised about “over payments” said to have been made to her. Explosive details of the school’s finances became public. At the time of her sacking, Storelli enjoyed a $560,000 remuneration package. Not only was Storelli paid more than the prime minister, her taxpayer subsidised salary exceeded that of state school principals by a multiple of between three and four.   As for the school itself, it had an operating budget of $55m. In the three years prior to the sacking, MLC had received $25m in government funding. You can count the number of public schools who received equivalent funding in the same period by ignoring the fingers on one hand, and instead gazing intently at your navel.   A ridiculous amount of media space was devoted to the ins and outs of the Storelli sacking. For Melbourne newspapers, particularly The Age, it was a sacking like no other and merited weeks of saturation coverage. The school’s parents, the wealthy burghers of Melbourne’s comfortable eastern suburbs, took direct action, forming a picket line at the school. Unprecedented.   Of course growing inequality is not unique to Australia; it has become an increasingly prominent issue globally. The issue resonates in advanced economies, a by-product of the dominant neo-liberal economics of the last 40 years.   In the US, minimum wage employees do not earn enough to survive and are forced to take a second or even a third job to make ends meet. All attempts to reduce inequality – including through taxation and other redistributive policy – are countered with a conservative cacophony of “class warfare” as the wealthy seek to aggressively maintain their advantage. In 2005, multi- billionaire Warren Buffett claimed that the rich was winning. By 2011, he declared that the 20 year war was over. “We won”, he exclaimed. Buffett has argued for tax reform to change a system in which he pays less tax than his administrative assistant.   The relentless emphasis over the last 40 years in public policy on economic growth and material gain is now being challenged with an increasing urgency. Some of the critiques of neo-liberalism are coming from unlikely sources, most notably the head of the Catholic Church, Pope Francis who argues:   While the earnings of a minority are growing exponentially, so too is the gap separating the majority from the prosperity enjoyed by the happy few. This imbalance is the result of ideologies that defend the absolute autonomy of the marketplace and financial speculation.   His analysis, contained in the apostolic exhortation Evangilii Gaudium, has resulted in the Vatican being described as the modern “spearhead of radical economic thinking.”   The unprecedented aggregation of wealth in Australia has not engendered a more generous or altruistic era. Those who have amassed significant wealth or advantage now aggressively assert their right to enjoy it unencumbered by any interference in the form of taxation or redistributive policy. They find succour in the ardent support of the Liberal and National party, large parts of the media and peak business bodies.   Booming mining companies earning super profits declare war against any moderate taxation measures proposed by Treasury bureaucrats. Wealthy private schools and their customers decry the notion that taxpayer funding should be moderated in favour of poor or disadvantaged students and their schools. The wealthiest Australian superannuants fight for the right not to pay any tax on earnings from their large superannuation assets. Millionaire property investors threaten to rise up at any suggestion that negative gearing, a tax deduction ruse, be scrapped. As a result, younger and less wealthy people remain excluded from the property market.   A few decades ago, a bipartisan political consensus would have developed to challenge these rorts. Not so now.   We are increasingly producing a nation of millionaires who have pulled up the drawbridge behind them. The prosperous are easily angered and more inclined to share their anger than their wealth. Goaded on by a bipartisan political consensus, they rail against a "cost of living crisis". It doesn’t exist in an era of low inflation and hasn’t done so for years. In reality, the affluent rail against a cost of living-really-well-crisis: the cost of owning a house, a negatively geared investment property and funding three kids in private schools. Take for example politician Joel Fitzgibbon, who last year issued an impassioned cri de coeur on behalf of the “battlers” of his electorate earning $250,000 per annum. Oh, and he is a Labor politician.   Although the word has infrequently passed an Australian politician’s lips in the past decade, many of the most contentious political issues in recent years have been contested through the prism of inequality. Institutions that moderate income inequality – including a much diminished trade union movement, the federal industrial relations tribunal and social welfare safety net – are relentlessly attacked by the right. A divided, weakened left grimly and intermittently defends. On occasion it is the offender, as the Gillard government did in relegating to single parents onto Newstart.   The US Republican political strategy, evidently used to great effect, is to challenge any policy measures to alleviate its eye-watering levels of inequality as “class war”. That tactic has been imported into Australia. Bernard Keane has documented how the cry of “class war” has been deployed to describe variously Gonski’s more equitable education funding policy (Christopher Pyne, Kevin Donnelly), the super profits mining tax (Andrew Forrest), the proposal for our most wealthy superannuants to pay 15% tax (Matthias Cormann) and just about everything else (Tony Abbott, Joe Hockey).   Keane observes:   Whenever "class warfare" is invoked ... disproportionate or unjustified benefits for high-income earners or large corporations are under threat.   It is a measure of how far politics has shifted that David Gonski, successful businessman and a member of blue chip boards including ANZ and Coca-Cola Amatil, is charged with “class war” by conservative politicians and their shouty media echoes in our national newspapers. His crime? Painstaking public service to restore falling educational standards and repair grossly inequitable allocations of resources to schools.   Celebrated Australian novelist Tim Winton is bemused by the cultural transformation that is revealed by responses to expressions of concern about growing inequality: invariably, a retaliatory accusation of a “nostalgia for Stalin”. In 21st century Australia, he laments that the language of class warfare is not invoked by the “vanquished working class”, but by the middle class.   In the history of the existential crisis that is the federal ALP over the last 18 years, there have been many low lights. The Tampa crisis, the PNG Solution, the Rudd/Gillard schism, Craig Thomson and corruption within the HSU. Arguably, the most devastating low-light of them all was the meek capitulation by some Labor “icons” to this Tea party politics during the life of the previous government. Like lemmings hurtling over a cliff, Simon Crean, Martin Ferguson and Kevin Rudd all called for an end to the ALP’s “class warfare”. Their pleas came just two years after Warren Buffett’s declaration of victory by the rich.   Within three months of being elected, the surprisingly brazen Abbott government has trumpeted an unambiguous message: now is not the time to be unemployed, disabled or a low wage employee in Australia. A series of government decisions has inflicted further disadvantage on the low paid including aged care and child care workers. The superannuation balances of employees earning less than $37,000 per annum have been reduced. The Gonski education reforms have been sabotaged. An increase in the GST is inevitable, further hitting the poor.   As I write, Abbott’s government is fiercely resisting a law suit which seeks to restore the pay of 10,000 disabled employees after it was illegally halved. Some of my clients in that case currently earn less than $1 per hour.   Advance Australia unfair, by Tim Dunlop.   Traditionally, the values that have bound Australia together have been those of egalitarianism and fairness, and it is the abandonment of these that is starting to characterise the approach of the current Abbott government.   Changes to superannuation that favour the rich over the low-paid; abolishing a pay rise for low-paid workers in the childcare sector; abandoning the Gonski reforms that set in place a more equitable funding scheme for public education; floating the idea of a Medicare co-payment for GP visits; gutting the NDIS: all of these point to a government trying to restructure the economy not for the benefit of the many but for enrichment of the few.   It is one thing to decide not to offer any financial support to a company like Toyota; it is quite another to blame workers and their union for the loss of jobs, despite the fact that the company itself has denied the accusation.   Of course, Mr Abbott is perfectly free to assert that a skeleton government, unionless workplaces, reduced public services, cuts in welfare, cuts in wages, and a minimally taxed business sector is a recipe for a fair and decent society, but we all know that that is rubbish.   How do we know? Because we have a 40-year experiment in precisely the sort of policies he is now pursuing and we can check the outcome. That experiment is called the United States, and it is one the least equal developed nations on earth, decaying from the middle (class) out. So we know how the story ends.   http://www.pewresearch.org/fact-tank/2013/12/05/u-s-income-inequality-on-rise-for-decades-is-now-highest-since-1928/   And yet this is exactly where we are heading, mere months into the first term of an Abbott government. We are, as a nation, being transformed from a society into an economy.   The values of equality and a fair go that enliven our civic pride (and rightly so) are being superseded by the dogma of an anti-democratic, market extremism.   This goes well beyond a difference of opinion over political ideologies, and it is not simply about the assertion of conservative values over progressive ones. It certainly can’t be reduced to an argument between the left and the right.   It is the core values of fairness and egalitarianism - beliefs that transcend simple left-right divisions and that underpin Australian democratic achievement - that is threatened by the current government’s agenda.   The creeping barrage of political language, by David Hetherington.   By trying to redefine our understanding of "fairness" and "poverty", the Australian conservative movement is paving the way for its pro-business, anti-welfare agenda.   Nearly 100 years ago, humans invented the creeping barrage. A WWI battlefield innovation, the barrage cleared terrain by raining down artillery immediately in front of one"s own advancing infantry, creeping a hundred yards every few minutes. What remained was a wasteland, primed for occupation but good for little else, a testament to the dark side of human creativity.   Thankfully, the creeping barrage is now obsolete but the theory continues to be applied in another, unexpected setting: the political debate. Over the course of the summer, we have seen the ground prepared for a broad political offensive.   The gunners are the media columnists, interest groups and ex-politicians. The battleground ranges across poverty, fairness, welfare and human rights. And the attacking infantry are Tony Abbott"s Coalition government, determined to push forward its ideological front and occupy the ground cleared by its creeping barrage.   Rather than shells and mortars, the ammunition is now political language. A decade ago, the linguist George Lakoff famously wrote Don"t Think of an Elephant!, which explored the power of conservative linguistic frames and their impact on the 2004 presidential race. Today, the conservative movement in Australia is showing they have learned Lakoff"s lessons well.   The intent of their creeping barrage is to distort the meaning of terms such as poverty and fairness to allow them to be "claimed" by the Abbott Government as it advances its agenda. The co-ordination between the gunners and the infantry is understood, rather than formalised. The columnists know their job; they don"t need to be told what to attack and when. The ministers and MPs are confident their artillery will do its job where it"s needed.   Take poverty. The Government knows it"s not a good look to be bashing poor people directly. But many of its policies have exactly this effect: the removal of super tax concessions for low-income earners, the repeal of pay rises to childcare workers, a mooted new co-payment on Medicare. The trick then is to deny that genuine poverty exists in Australia.   Cue Adam Creighton from The Australian. In a recent column, Mr Creighton asserts that "talk of endemic poverty in Australia is an insult to the millions of people overseas experiencing genuine privation". Our problem is not poverty, he argues, but addiction to welfare. He disputes Australian Council of Social Services research showing three million Australians below the poverty line by arguing welfare entitlements make the suggestion of such poverty "farcical".   Accordingly, no policy can hurt the "genuine" poor because in Australia, they don"t exist. Creighton relies here on a technique philosophers call association fallacy. Since someone claiming full benefits could not possibly be poor, widespread poverty is impossible. This approach excludes, among others, labour hire staff working irregular hours on the minimum wage, who are undoubtedly poor in today"s Australia.   Another technique employed by the barrageistes is old-fashioned Orwellian double-speak. The subject matter here is fairness, and the gunner is Tony Shepherd, president of the Business Council of Australia and head of Tony Abbott"s ideologically constructed Commission of Audit. He told a Senate Committee in January that his Commission would be guided by the principle of "fairness?". Given the commission is expected to propose most significant public service cuts and the sale of public assets to big business, it is reasonable to ask "fairness for whom?" (Fairness didn"t encompass any community sector representation whatsoever on the commission, with the Business Council strongly supporting the $4.5 bn cut back to overseas development assistance)   The essence of fairness is people getting what they reasonably deserve. Does big business deserve the tax cuts they want more than the needy deserve decent public services? Not on any serious examination, but by claiming the mantle of fairness, Shepherd seeks to redefine the impact of the Commission"s work.   A third technique is the classic straw man. In a recent speech, Nick Cater of The Australian attacks what he calls "the fixation with human rights" or more succinctly, "the victimhood club". The speech was part of a broader effort by Cater and others to lay the groundwork for George Brandis"s controversial changes to Australian racial vilification laws and the Human Rights Commission.   In it, Cater ridicules the case of Cecil, a Santa Claus actor from Adelaide who complained to the Commission after being sacked for wearing glasses and won $600 in compensation. See how ridiculous human rights institutions must be if this is what they spend their time on? Get it?! An example, Cater argues, of how "disability is the growth area in the anti-discrimination industry these days".
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