Australian crossbench senators have said they would support the federal government’s AU$176 billion tax plan in exchange for a tax on digital companies such as Google, Facebook, and Uber.
The Coalition needs two more votes to get its plan to cut income tax for low- and middle-income workers, and lower corporate taxes, passed by Parliament.
Centre Alliance senators Stirling Griff and Rex Patrick are “100 percent behind a digital economy tax proposal”.
“If the digital economy tax makes the government coffers swell more than they do now, that is very much a positive step,” Senator Griff told Fairfax media.
“As long as there are no cuts to core community services, we’d be receptive to a degree of tax relief for everybody. A lot could happen in six weeks; maybe the company and income taxes can be done by July.”
The government is trying to get a AU$140 billion income tax cut plan, as well as a AU$35.6 billion bid to lower the corporate tax rate for big businesses, through Parliament.
The package, a key plank of the federal Budget, is due for debate in House of Representatives on Tuesday.
Labor has thrown in support the first part of the seven-year tax cut plan, and the party also supports taxing the digital economy, but shadow assistant Treasurer Andrew Leigh told Sky News it needs to be a permanent solution, not a stop-gap measure.
“The policy needs to be evaluated on its merits,” he said.
The government said it is focused on ensuring multinational tech companies pay their fair share of tax.
“The next big challenge is to ensure big multinational digital and tech companies pay their fair share of tax,” Treasurer Scott Morrison said in his Budget speech.
“Over the past year, I have been working with counterparts at the G20 to bring the digital economy into the global tax net. In a few weeks’ time I will release a discussion paper that will explore options for taxing digital business in Australia.”
Morrison had in March used a G20 finance minister meeting to highlight his multinational tax avoidance scheme, pushing his counterparts to work together on ensuring multinational tech companies like Google, Apple, and Amazon are properly taxed.
The DPT hits multinationals with global revenue of more than AU$1 billion and Australian revenue of greater than AU$25 million with a 40 percent tax on all profits.
The tax is expected to see AU$100 million in revenue per year — from 2018-19 — stay on Australian soil.
According to the government, it has used its Diverted Profits Tax (DPT), Multinational Anti-Avoidance Law (MAAL), and Tax Avoidance Taskforce to raise around AU$5.2 billion in tax liabilities from large companies since July 2016.
“Globalisation and digitalisation of the economy present challenges for the international and Australian tax frameworks. Under existing frameworks, digital businesses can have a significant economic presence in Australia without making a significant contribution to tax revenues here,” the Budget papers said.
“The government is taking action to ensure the integrity of Australia’s thin capitalisation rules, which limit the amount of debt deductions multinational entities can claim in Australia. The government will improve the integrity of these rules by ensuring that asset valuations used to justify debt deductions are robust and that inbound investors cannot access tests that were only intended for outward investors.”
Within the Budget documents, it was said the government will strengthen the definition of a large multinational — or Significant Global Entity — to ensure that it operates as intended.
“This will ensure that large multinational businesses that are ultimately owned by private entities or investment entities are not inadvertently excluded from the application of tax integrity rules,” the papers continued.
The Senate will next sit in the final two weeks of June.
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