Greens link ‘Google levy’ to company tax support

Malcolm Turnbull’s chances of getting his corporate tax cuts through the Senate could hinge on a tax blitz of global tech giants.

Senator Mathias Cormann. Picture Gary Ramage

Malcolm Turnbull’s chances of getting his corporate tax cuts through the Senate could hinge on a promised crackdown on tax avoidance by global tech giants, with key crossbenchers saying the budgetary impact of a proposed “Google tax” will influence their decision on the $35.6 billion enterprise tax plan.

Centre Alliance senators Rex Patrick and Stirling Griff, whose votes will determine whether the Prime Minister’s signature economic reform becomes a reality, said the proposed crackdown on international technology companies could help secure their support for the corporate tax cuts bill.

Scott Morrison used his budget address to flag an expansion of the government’s crackdown on multinational tax avoiders, promising tough treatment for digital-economy firms.

Treasury is preparing a discussion paper on the issue, to be released within weeks. The paper will look at how Australia can work with other jurisdictions, including the European Union, to make big tech companies “pay their fair share of tax”.

Finance Minister Mathias Cormann, who met the Centre Alliance senators in Adelaide last week, is expected to use the return of senators to Canberra this week to resume negotiations with the pair on the government’s plan to cut the company tax rate to 25 per cent for all businesses by 2026-27.

The crossbenchers, formerly known as the Nick Xenophon Team, have made budget repair their priority in relation to the tax cuts, saying they want to be sure the benefits to business are not at the expense of cuts to health, education and social services.

Senator Rex Patrick said Centre Alliance had not specifically linked the Google tax to the passage of company tax cuts, but the grouping would look closely at the detail of the government’s proposals, along with a planned toughening of the Petroleum Resources Rent Tax.

He said Centre Alliance had a strong interest in ensuring companies such as Google and Facebook paid more tax, dating back to Nick Xenophon’s leadership of the grouping.

“We would like to see fair taxes paid by those companies, and at this point in time we don’t think it’s fair,” Senator Patrick told The Australian.

“Our primary concern is making sure that moving forward you wouldn’t have any cuts to health, education and welfare, and, as a result, any revenue measure that broadens the tax base and makes sure everyone is paying their fair share is a good thing.”

Senator Patrick said he believed the government was poised to unveil measures that could make Centre Alliance’s decision easier.

“I think they might have some things they are about to announce that might help everyone,” he said.

Senator Griff told The Australian he was “very keen to see the specifics” of the Google tax.

“If there are new or improved revenue sources so we feel comfortable there is sufficient money coming into the coffers, and at the same time there is a cast-iron guarantee that if things go pear-shaped there wouldn’t be a cut to core community services, then of course we’d be open to negotiation,” he said.

Senator Griff said it was clear that big digital and technology companies were not pay enough tax in Australia.

“They have very large revenues, and pay very little tax. And being a former small business operator, (I know) there is a relationship between revenue and tax,” he said.

Senator Griff said he believed the government would seek to mirror efforts by the EU, which has unveiled a plan for big technology companies to pay a 3 per cent tax on the money they make from user data or digital advertising in the jurisdiction where the revenue is raised, regardless of their bricks-and-mortar presence.

The approach differs from current rules, with companies taxed where they make their profits, which has encouraged digital economy players to shift their profits to low-tax jurisdictions.

In his budget speech this month, the Treasurer said the tax treatment of big technology companies would be “the next big challenge” for the government.

He said the upcoming discussion paper would build on the work he had done with G20 counterparts into the global tax net.

In a speech to business economists in April, Mr Morrison said Australia continued to see “a big part of our tax base being ripped out of our country” by technology companies.

The Treasurer discussed this issue this year with Google and Amazon during a visit to Silicon Valley. He said the companies understood the system, which had benefited them greatly, was not sustainable.