The opposition is proposing a hefty increase in penalties for those found marketing tax avoidance schemes, should they win the next election.
In recent years the Australian Taxation Office has begun a crackdown on accountants and lawyers who are found to promote tax avoidance schemes to their clients. Corporate entities can face fines of up to $5.25 million, and individual fines can be up to $1.05 million under current legislation.
Labor is proposing to increase the penalties to $10.5 million for corporate entities and $2.1 million for individuals, which they claim is more in line with penalties in other areas of the law.
Speaking to ABC News, shadow assistant treasurer Andrew Leigh stated that “tax avoidance has severe consequences for growth and equity in Australia” and that it “drains away revenue and erodes public confidence in the tax system”.
Billions of dollars in tax is lost each year through tax avoidance by large corporations and multinationals, money that could be used to fund public services such as hospitals, transport and education.
Tax havens, or ‘secrecy jurisdictions’ such as the Cayman Islands and Bermuda, allow large corporations to avoid paying tax. While the practice is legal, it ultimately increases the burden on honest workers and businesses.
James Henry of the Tax Justice Network describes users of tax havens as a “group of people who are basically citizens of nowhere for tax purposes and yet are able to call in the benefits of society for defence, national security, all of the benefits of having a rule of law and courts that they take advantage of all the time to make their money”.