The Normal Suspects: Oil and fuel majors star in Australian tax theft

Imagine making $ 13.3 billion and paying no income tax for the year, or better yet, $ 56.5 billion over six years and not paying a red cent in taxes. a big fat donut.

Want to pocket $ 5.6 billion for the year, a la Viva Energy (formerly Shell gasoline business), and not pay any income tax?

How about that then? Rolls of drums, trumpets, lights – good old Energy Secretary Angus Taylor is rocking his $ 2.3 billion oil bailout and hurling taxpayers’ money in case you think about shutting down your oil refinery.

How good is it not to pay taxes AND get public subsidies?

If this government were transparent about how it was spending our money, we might also find that the big overseas oil and gas companies have also claimed JobKeeper. Unfortunately there is no public register.

The current flood of handouts for large corporations is biblical. When you’re a very large company, there’s never been a gentler approach to subsidies than managing Scott Morrison and Josh Frydenberg.

It is true that during a pandemic it is acceptable to use public money to defend the economy. However, the corporate titans, many foreign-owned, have already drained us on the tax front.

Data wobbling

Every year, just once a year, we can see how much taxes the largest companies in the world pay in Australia or not. The annual transparency report came last week.

The government is so keen to gloss over the multinational tax avoidance fraud that it pushed the release of annual tax transparency data back in 2017 to match the drama of the gender equality vote. almost to the minute.

The tax report landed around 5 p.m. on the evening of December 9th, when cheering scenes broke out across the country and politicians actually embraced in parliament.

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The gray men and women of manipulating government media have since become more subtle. Instead of waiting for a “big news day”, they are now filing a series of briefing papers and press releases to select journalists the day before the annual tax data decline.

That way, journalists focus on the government’s message rather than the actual numbers, like ExxonMobil, which again pays no taxes, or Rupert Murdoch’s News Australia Holdings, or Chevron, Vodafone, Virgin and Lendlease, which pays zero. Or Qantas or Shell and the coal seam gas frackers pay little or nothing.

We’ll get to the goodies and baddies of 2020 shortly. Suffice it to say that the government message, spread across the media 12 hours before the actual data was released this year, was that corporate tax avoidance in Australia has been defeated. It’s all over, they reckon with the exception of $ 2 billion.

You see, they relate to a metric called the “tax gap”:

“The tax gap is an estimate of the difference between the amount of tax charged by the ATO and what we would have collected if every taxpayer had fully complied with the tax law.”

The government estimates the tax gap for large corporations this time around $ 2 billion. In other words, it is claimed that there is virtually no problem with large companies in Australia avoiding taxes. End of the story.

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Big government credibility gap

The problem with this view of the world, aside from the fact that it is blatantly wrong, is that the coalition said the same thing in 2013 and 2014 as calls for a parliamentary inquiry increased. “Nothing to see here,” was the line as it is now.

That’s the reality:

  • Corporate tax avoidance is widespread
  • Billions are withdrawn in tax havens off the coast
  • The tax gap for Exxon alone is likely to be at least $ 2 billion
  • It depends on how you calculate a tax gap
  • Oil and gas companies are once again appalling tax evaders
  • The FAANGs (Facebook, Amazon, Apple, Netflix, and Alphabet, formerly known as Google) are still a big problem
  • The big banks BHP, Rio Tinto, and some large domestic companies pay the lion’s share of corporate tax in Australia.

The Senate’s 2015 investigation into corporate tax avoidance, which turned out to be a complete success, was rejected by the coalition, but reforms passed since then – including this list of tax transparency – are bringing billions of dollars into the treasury.

The agents of the tax office will inform you that behavior at the upper end of town has changed. The perception that you are not paying your fair share can have reputational and financial consequences.

But the game of multinational tax avoidance played by so few with harmful consequences for so many will never be won. The stakes are too high.

The small things

In terms of the data, NXE Australia owns News Corp’s stake in Foxtel, control of which has mysteriously passed to an unidentified entity controlled by Rupert Murdoch in Delaware’s secrecy jurisdiction.

NXE Australia posted total income of $ 2.99 billion last year, wiped out all taxable income and paid no taxes.

IKEA is back to its bad old habits. It had started paying a modest amount of tax in Australia, but posted total income of $ 1.4 billion in 2019 and wiped out its tax obligations entirely.

Compare this to local furniture maker Nick Scali, who had a total income of $ 266 million, taxable income of $ 59 million, and a tax liability of $ 17.7 million.

Lendlease continued its hideous track record of paying high salaries and shareholder dividends but nothing for the tax officer. It reported revenues of $ 10.4 billion. No tax paid.

Qantas finally got well on the tax front after four years of zero, a year of only $ 10 million and now $ 259 million in taxes. The final amount of tax paid will ultimately exceed the compensation of Chairman Alan Joyce. Airlines are difficult to operate, and Qantas’ poor track record of paying taxes is testament to the huge tax losses that are compared to profits year after year.

However, now that the company has taken gigantic Covid subsidies, it is time to have a serious discussion about the obvious – that is, limit the length of time that tax losses can persist. Other countries do. Next year, Qantas will pay no taxes again and for many years after that. Time to limit the time frame for claiming tax losses.

Then there is the energy sector, gas and electricity, which once again excelled in ripping off a nation.

The two now privatized ausgrids have grossed $ 476 million and $ 658 million apiece and levied no taxes.

While the government is angry about its trade war with China, the Chinese are annoying us on the tax flanks. CNOOC Gas and Power had $ 1.8 billion in income and paid no taxes.

Victoria Power Networks, which is controlled by the Chinese and sells power through Powercor and Citipower, had revenues of $ 1.6 billion and no taxes.

Spark Infrastructure? Similar business.

Australian Gas Networks Holdings, now controlled by CK Group in Hong Kong, paid $ 1 million for $ 617 million.

The LNG export boom was truly a disaster, with losses in the tens of billions, rampant domestic gas prices, and little license fees or taxes.

With this in mind, ConocoPhilips Australia Gas Holdings had $ 1.6 billion in income and no taxes, and Woodside had $ 8.2 billion on taxable income of $ 2 billion, but no taxes.

Australia Pacific LNG announced $ 7.2 billion in zero-tax income (that is Origin ConocoPhillips and Sinopec). Shell’s fracking company QGC Upstream Holdings – a veteran and egregious non-taxpayer – had $ 4 billion in income and zero taxes. Santos $ 4.3 billion and no taxes, Shell Upstream Holdings $ 5.5 billion and no taxes. Is everything a bit repetitive?

It is no wonder the gas lobby got the government behind its “gas-led recovery” thinking. They have to make up for their losses before the gas assets are stranded.

There were some bright spots. Beach Energy had income of $ 2 billion and taxes of $ 192 million. Caltex and BP were once again respectable taxpayers, while EnergyAustralia, a tax pariah until last year that sucked billions from its parent company in the infamous British Virgin Islands, paid a whopping $ 800 million in taxes after $ 370 million the previous year.

However, the epidemics remain. Chevron with $ 12 billion and zero taxes, Ichthys with $ 802 million and zero taxes, Puma Energy with $ 3.5 billion and zero. Origin, no stranger to tax harassment, grossed $ 180 million with nearly $ 16 billion in income.

Coming soon: The Top 40 Tax Dodgers rankings for 2021.

Glencore, media battles and the pitfalls of fighting a multinational company