Private Healthcare Australia says the companies,which supply devices like hip joints,screws and pacemakers,receive about $625 million a year in subsidies through the private health insurance rebate and pay about $310 million a year in tax.
According to Private Healthcare Australia,medical device suppliers receive more subsidies than they pay in tax.Nic Walker
The body representing the multinational companies toldThe Sun-Heraldthat its members always comply with Australia’s taxation laws. But the question is whether those laws are fit for purpose.
Labor went to the election promising to overhaul the multinational tax system and raise an extra $1.9 billion in the process. Given the growing budget debt and deficit,more revenue is clearly needed and targeting companies that are not paying their fair share of tax is a good way to get it.
That money is also needed to pursue Labor’s election promises,including higher quality aged care services and more accessible childcare,and to meet the growing cost of government programs like the National Disability Insurance Scheme.
Multinational companies are the big winners out of globalisation,according to the Organisation for Economic Co-operation and Development,which is spearheading an international effort to rebalance the global tax system and make it fairer,for the benefit of societies around the world.
Multinational companies are the big winners out of globalisation,according to the OECD.Bloomberg
The OECD says globalisation has promoted unhealthy tax competition between countries,and digitalisation of the economy has made it too easy for multinational companies to move their profits to countries with lower tax rates.
It says digitalisation “has undermined the basic rules that have governed the taxation of international business profits for the past century” and is costing governments around the world much-needed revenue,especially when money is needed to fund COVID-19 recovery.
More than 130 countries,including Australia,have signed on to its proposed solution,which includes a minimum corporate tax rate of 15 per cent for multinational companies worth more than $1 billion,and a policy to reconnect tax to the country where a company’s customers are.
The 15 per cent tax rate on its own is expected to produce an extra $US150 billion in tax revenue around the world each year.
As assistant treasury minister Andrew Leigh will tell the Organisation for Economic Co-operation Development on Thursday,sourcing more tax from multinational companies will help pay for services that ordinary voters need.
Beyond implementing the OECD solution,the government hopes to get more tax by improving transparency around how much tax companies pay,to put pressure on those companies to be socially responsible and pay their share.
And it is holding a review into the multinational tax avoidance to determine how exactly to reform the system to make it fairer.
This is all prudent policy,but with national debt approaching $1 trillion,earning $1.9 billion by cracking down on multinational companies is not enough.
The government must do more to build its revenue base,especially given its reticence to change tack on promised income tax cuts.
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