When the rest of the world's leaders moved swiftly to condemn the tax rorts exposed in the Panama Papers, our prime minister was curiously silent. Today, we learn that he was one of those named. John Passant questions just how serious Malcolm Turnbull is on cracking down on tax avoidance.
NEIL CHENOWETH in the Australian Financial Review is reporting that Malcolm Turnbull has been named in the Panama Papers
'Prime Minister Malcolm Turnbull is named in the Panama Papers as a former director of a British Virgin Islands company set up and administered by law firm Mossack Fonseca to exploit a Siberian gold prospect.'
He goes on to say:
'A spokesman for Mr Turnbull said last night that the Prime Minister was not aware the company had been administered by Mossack Fonseca as the registered agent in Road Town, Tortola. There is no suggestion he had acted improperly.'
Chenoweth also reports:
'Responding to allegation that Star Technologies had made donations to Russian politicians the spokesman said Mr Turnbull was not aware of any such donations either before or after he was a director.'
This is not the first tax haven publicity Mr Turnbull has had.
Writing in the Sydney Morning Herald in October last year, Heath Aston told us:
'Mr Turnbull has invested in two hedge funds since July last year – Zebedee Growth Fund and MSD Torchlight Partners – and both list their address as Ugland House, George Town, Grand Cayman.'
I am not suggesting any wrongdoing. Tax havens are integral to global capitalism. They account, nominally at least, for 50 per cent of global trade. About 57% of the top 200 companies listed on the Australian Stock Exchange have subsidiaries in tax havens. In part at least this may help explain why 36% of big business, according to the ATO Corporate Tax Transparency Report, paid no income tax in the 2013/14 financial year.
Tax avoidance more generally is also systemic.
As Google Chair Eric Schmidt said about his company’s tax avoidance activities around the globe, activities which have seen it funnel almost $10 billion into Bermuda, saving $2 billion in taxes:
“The company isn’t about to turn down big savings in taxes. It’s called capitalism. We are proudly capitalistic. I’m not confused about this.”
Tax breaks for business and the rich are also systemic. The tax concessions for superannuation and the capital gains discount, together with the losses associated with negative gearing, result in revenue forgone of over $40 billion. Almost half of that $40 billion goes to the top ten percent of income earners.
Given that tax avoidance and tax havens are integral to capitalism, it should come as no surprise that a major capitalist like Malcolm Turnbull, with a Business Review Weekly rich list estimated wealth of $200 million, should have investments in hedge funds and one arrangement through Mossack Fonseca. This is business as usual, and Turnbull is a businessman first and foremost.
We mere taxpayers, from whom every payday an amount is extracted and sent to the ATO, can only look at the games rich people and capital play with their tax and other business affairs in disbelief. We live in different worlds.
That is the point. The world of the 1% is a very different to the world of ordinary workers. It is why the budget of Turnbull and Morrison was all about attacking workers and the poor to pay for tax cuts for business. In Turnbull's world, unleashing the "animal spirits" of business will produce a capitalist utopia. The evidence shows there is no relationship between cutting company taxes and any substantial improvement in wages, jobs and growth.
What business tax cuts do is help offset the tendency of the rate of profit to fall, for a little while. Marx identified this tendency over 150 years ago as being the logical outcome of the success of capitalist production. Other ways of addressing systemic falls in profit rates include lengthening the working day (anyone notice the 43 week we work on average, much of the extra hours unpaid?), or holding down wages.
The slowdown of the Chinese economy, and the end of the mining boom, and declining profit rates, have created the conditions for a real contraction of the Australian economy, with a consequent ratcheting up of attacks on the poor and workers. Just as in 2013, deep government spending cuts won't be on the agenda until after the election.
The logic that sees Malcolm Turnbull use tax havens for his investments and business is the same logic that will see him attack workers and the poor after the election. This reflects his personal reality. How could one of Australia's richest men know what Duncan Storrar goes through every day just to survive, let alone take action to make the lives of the millions like Duncan better?
It also reflects the reality of Parliament as an institution of capitalism. No matter who is in government they are managing capitalism. This puts profit, not human need, as the paramount organising principle for capitalist governments.
That is why, for example, the crackdown on tax avoidance is all bluster. The Government's much vaunted Diverted Profits Tax, also known as the Google tax, will collect only $100 million in 2018/19 and the same paltry amount in 2019/20. This is chickenfeed but politically gives the impression of doing something. Labor's proposals aren't much better.
But wait, apparently an ATO Tax Avoidance Task Force of 10 staff will bring in $3.7 billion over the forward estimates. This is the same ATO and government that have sacked 4,400 staff with who knows what deleterious impact on revenue collection. It look again to be more propaganda to cover up a lack of action to date.
So remember, when politicians talk about cracking down on tax avoidance they are managing a system in which tax avoidance is systemic and tax havens are integral.
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There's never been a more exciting time to be an Australian prime minister named in the Panama Papers.— Dave Donovan (@davrosz) May 11, 2016
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