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More than a third of Australia’s top 1500 corporations paid no tax in 2013-4 and that is not unusual. Qantas ($15bn turnover), LendLease ($7.6bn turnover), Chevron ($3bn) and Transfield Services ($2.8bn) were some high profile examples. The corporate tax rate on profits is set at 30%, but legal tax minimisation strategies enable many corporations to pay far less.
Put simply, multinational companies move their income offshore to other offices and subsidiary companies in countries with low tax rates (Luxembourg, Bermuda, British Virgin Islands, Singapore), while at the same time moving their debts to high tax jurisdictions like Australia, where they get better deductions for debts or expenses. Money moves around the globe in order to take advantage of every tax break, discount and loophole possible. Almost 60% of ASX200 companies have declared subsidiaries in tax havens, and can only be related to this purpose.
Understandably, Australians find this difficult to swallow, given the levels of tax we all pay as individuals. These businesses are usually well known, high street names and embedded in contemporary life. They go to great lengths to show how caring and civic-minded they are. The goodwill of the Australian people is an extremely important metric in their profits.
The strategies of these corporations are not without advantages for the cultural sector.
Many of these businesses spend significant advertising dollars on cultural organisations, festivals and events. Sponsorship is not philanthropy at work, this is sensible business promotion and profit-building activity. If sponsoring the Goat Racing in Lightning Ridge were to offer a markedly better return on investment next year than sponsoring say, the Melbourne Festival, that is where the smart money would go, assuming no contract held them back.
At the same time, we have a huge hole in funding small/medium size arts & community organisations across the country, which are simply not attractive enough for corporate sponsorship.
The Arts Party believes this problem can be addressed in a way which directs the money multinational companies spend on arts sponsorship to culture activity that benefits the community.
Our idea is to introduce a new Community Cultural Tax, based on 0.1% of total income or reported turnover, to be paid by every company and corporation in Australia with a reported turnover in excess of $100m. That would mean $100,000 per $100m of turnover, about 2/3rd the wage of a single corporate middle manager. A 0.1% tax is a small charge to truly give back to the Australian community.
Based on the 2013-14 ATO figures alone it would have collected around $1.63bn, to invest in Australian communities everywhere. What an amazing change that would make! Of course, companies that did sponsor and contribute to cultural organisations around Australia could offset this levy up to the 0.1% threshold.
How to manage this new cultural investment? A new fund would be set up to hold the proceeds and process funding applications from across the country, administrated by the Australia Council or the Arts Ministry. It would accept applications from individuals, groups, organisations and councils. Funding could be both singular projects and longer term support of up to 5 years at a time. The mission would be to promote the best possible cultural engagement for all Australians. Through a simple and small new corporate tax we could transform cultural funding opportunity in Australia.
The Arts Party formed two years ago and is Australia’s only party dedicated to arts, culture and creativity. We are currently crowdfunding our federal election campaign. If you would like to help us give The Arts a voice at the Federal election then please contribute to the campaign: http://www.pozible.com/project/204920
Links:
https://www.etax.com.au/tax-loopholes/
http://data.gov.au/dataset/corporate-transparency
http://www.abc.net.au/news/2015-12-17/almost-600-companies-did-not-pay-tax-in-2013-14/7036324
http://www.unitedvoice.org.au/news/who-pays-our-common-wealth
