high degree of accuracy and integrity in company reporting and governance systems .... Deloitte Access Economics et al.,
TAX
APRIL 2016
FACTS
PRODUCED BY THE MINERALS COUNCIL OF AUSTRALIA
1
MINING PAYS ITS WAY
% 46.8
→ Federal company tax and state royalties alone from the minerals industry amounted to $165 billion in the decade to 2014-15.1
42.1 40.6
→ Royalty payments have increased from $3.2 billion in 2005-06 to $8.4 billion in 2014-15. Royalty payments have exceeded $8 billion each year since 2010-11.2
MINING COMPANIES ARE LEADERS IN TAX TRANSPARENCY
In 2013, Labor’s Assistant Treasurer David Bradbury noted that Australia’s largest mining companies disclose ‘a vast array of information about the tax they pay and their tax affairs’.4 Australian mining companies have taken additional transparency steps since then. → In 2015, the Minerals Council of Australia (MCA) published its fifth annual Minerals Industry Tax Survey, conducted jointly with Deloitte Access Economics. → Between 2011 and 2014, the MCA participated actively in the Australian pilot for the Extractive Industries Transparency Initiative (EITI). This demonstrated a high degree of accuracy and integrity in company reporting and governance systems. → Transparency International has consistently ranked BHP Billiton and Rio Tinto (Australia’s two biggest miners) near the top of its global rankings on corporate reporting transparency.5 → Since mid-2015, the MCA has played a constructive role as part of the Board of Taxation-led process to design a workable, voluntary tax transparency code in Australia.
4 20
13
-1
3 20
12
-1
2 -1
1 20
10
-1
0 -1 09 20
20
08
-0
8 -0 07 20
9
39.8
→ Between 2005-06 and 2013-14, mining companies paid 18 per cent of company tax while the industry averaged 8.6 per cent of GDP. 3
2
46.8
43.2 42.1
11
TOTAL TAX TAKE RATIO ON MINING
Mining companies pay a wide range of taxes, charges and levies to Australian governments, including: company tax, royalties, payroll tax, stamp duties and local rates. This helps pay for hospitals, schools, public transport and other social services.
20
Source: Deloitte Access Economics
3
AUSTRALIA IS A HIGH TAX MINING JURISDICTION AND THE BURDEN HAS RISEN IN RECENT YEARS
Australian taxes on mining are high relative to other resource-rich countries. As global competition intensifies, Australia risks falling further behind.
→ A 2013 Goldman Sachs study put the tax take from mining in Australia at 44 per cent compared with a global average of around 39 per cent. Countries with lower tax burdens included Brazil, Indonesia, Canada, Peru and the United States.6 → A 2016 study by Dr Jack Mintz and colleagues at the University of Calgary found Australia had the third highest tax burden on iron ore of nine countries examined (behind only Zambia and South Africa).7 → The 2015 Minerals Industry Tax Survey found the minerals industry as a whole faced a combined tax and royalty ratio of 47 per cent in 2013-14.8 → Economist Chris Richardson pointed out that: ‘Not only did those tax ratios never fall far, they’ve actually headed up over recent years’.9
The mining industry paid $165 billion in taxes over the past decade – that’s the same as federal spending on higher education and schools.
FIND US ON: /MineralsCouncilAust @MineralsCouncil
TAX FACTS
mineralscouncilofaustralia
www.minerals.org.au
4
5
AUSTRALIA’S CORPORATE TAX SYSTEM IS INCREASINGLY UNCOMPETITIVE
Australia has slipped well behind the rest of the world on company tax competitiveness over the past decade. Many other countries have substantially reduced their corporate tax rates.
→ Australia had the sixth highest company tax rate among 34 OECD countries in 2015, compared with the 14th highest in 2005.10
→ Australia’s 30 per cent company tax rate is about five points higher than the OECD average (25.3 per cent).11
AUSTRALIA HAS SOME OF THE TOUGHEST CORPORATE TAX LAWS IN THE WORLD AND MOST COMPANIES DO THE RIGHT THING
Australia has strict tax integrity rules and changes in recent years have only strengthened them. At the same time, as a capital dependent country, Australia needs to be mindful of taking steps that damage its own interests.
→
→ Australia relies more heavily on corporate tax than most developed countries (18 per cent of total taxation compared with an OECD average of 8.5 per cent in 2013).12
→ Australia’s Tax Commissioner Chris Jordan has described these measures as amounting to ‘a dramatic change in our ability to get that fair share, that right amount of tax, paid here in Australia’.14
→ At least two-thirds of company tax is shifted onto labour through higher prices, wage cuts and lay-offs.13
→ ATO Second Commissioner Andrew Mills has stated: ‘Any suggestion that we are going “soft” on large corporates avoiding their tax obligations could not be further from the truth ... it’s important to have a debate but even more important to do so with “facts”, not myths.’15
INCREASED RELIANCE ON COMPANY TAX CORPORATE TAX (percentage of total tax) Australia
%
OECD – Average
‘I have said many times that the majority of large corporates, especially Australian owned companies, pay the right amount of tax in Australia and are open and transparent in their dealings with us’.
25 20 15 10 5
12
11
09
07
05
03
01
99
97
13 20
20
20
20
20
20
20
20
19
95
19
19
93
0
19
Successive Australian governments have implemented a series of changes to strengthen the ‘integrity’ of corporate tax laws, including changes to general anti-avoidance rules (2015), transfer pricing (2014) and thin capitalisation (2014).
Source: OECD Revenue Statistics
Chris Jordan Australian Taxation Office Commissioner
(Senate Estimates, 10 February 2016)
ENDNOTES 1 2 3 4 5
6 7
8
Deloitte Access Economics, Minerals Industry Tax Survey 2015, Dec 2015. Ibid. ATO, Taxation Statistics (various) and ABS National Accounts (various). David Bradbury, address to MCA’s Biennial Tax Conference, 16 Apr 2013. Transparency International, Transparency in corporate reporting: Assessing the world’s largest companies, Nov 2015. Goldman Sachs, Resource nationalism poses big threat to miners, Jan 2013. Jack Mintz et al., Growing the Australian economy with a competitive company tax, Mar 2016. Deloitte Access Economics et al., op. cit.
9
10 11 12 13 14 15
Chris Richardson, Mining tax ratios revisited, a public policy analysis produced for the Minerals Council of Australia, No. 8, Mar 2015. Jack Mintz et al., op. cit. Ibid. OECD, Revenue Statistics, Dec 2015. Jack Mintz et al., op. cit. Chris Jordan, Senate Hansard, Feb 2016. Andrew Mills, address to the Australasian Tax Teachers’ Association 27th annual conference, Jan 2015.
