To put this into perspective, Bahamas companies last year bought an area the size of Israel. The Bahamas is now the fifth-largest owner of Australian agricultural land. It’s not because there’s a special relationship between our farms and theirs, but because investing through a tax haven is the economic equivalent of donning a wig and fake glasses.
To see why troublemakers love tax havens, take the case of Nevis. The Caribbean island doesn’t require companies to keep any financial documents in the territory. Companies don’t need to be audited. Because it doesn’t recognise foreign court judgments, anyone trying to claim assets in Nevis must bring suit in the nation’s courts, which requires posting a $US100,000 bond. Companies pay no tax. As Oliver Bullough puts it in his new book Moneyland, «the island is more than a tax haven. It is an everything haven». Did I mention that Nevis has more companies than citizens?
We need to get tough on tax havens. Under a Shorten government, if listed firms are doing business in a tax haven, they will have to inform their shareholders as a material tax risk. Companies applying for a government tender will have to disclose their country of tax domicile. We’ll work with superannuation firms to devise appropriate guidelines for tax haven investments. We’ll create a register that shows who really owns our firms, and publish country-by-country data on tax paid.
Oh, and for investors who now claim a tax deduction for travelling to tax havens, the days of getting an automatic refund for checking on your tax lurks are over.
Cracking down on tax havens and multinational tax avoidance isn’t just a matter of social justice – it’s also how we’re raising money to invest in the future. Among our many positive promises, is a plan to extend preschool to three year-olds, as nations like France, Ireland and China already do. That will benefit 340,000 Australian children, with the largest improvements in disadvantaged areas.
At the next election, Australia will face a choice: do we want to have the biggest tax lurks or the best prepared three year-olds? Do we choose the Bahamas or Belconnen? And will we let tax havens keep flying under the radar, or tell them that their joyride is over?
Because in the end, you can support tax havens – or you can improve public services. But you can’t do both.
Andrew Leigh is the Shadow Assistant Treasurer.