2021-09-06
The Greens have today announced they will push for a new 40% corporate super-profits tax on the excess profits made by big corporations, including mining corporations, in the balance of power after the next election.
The Greens’ push for a ‘tycoon tax’ follows the announcement this week of record super-profits across retail and mining sectors, and National Account figures showing the profit share of national income at the highest (30.3%) since records began, eclipsing last year’s new record1.
These new taxes are essential because there’s huge wealth in this country, but it’s being hoarded by billionaires and offshore shareholders. It’s time to make them pay their fair share.
On current polling, a power-sharing Parliament is the most likely outcome of the coming election and in the balance of power, the Greens will push for billionaires and big corporations to pay their fair share of tax to get dental and mental health fully into Medicare and build affordable housing.
The Greens’ Plan to tax the tycoons includes:
- A new Corporate Super-Profits Tax, being a 40% tax on big corporations, including mining corporations, that would raise $338 billion over the decade.
- The previously-announced new 6% tax on the wealth of billionaires to raise $48 billion over the decade (more details here)
- Winding back handouts and subsidies to coal, gas and oil corporations, details of which will be announced at a later date.
These policies have been costed by the Parliament Budget Office, they’re hugely popular and build on the Greens’ recent electoral success in Queensland.
How the Greens’ new super-profits tax will work
The 40% Corporate Super-Profits Tax announced today involves two components - one tax that applies to the mining sector and another that applies to corporations more broadly - both of which have been separately costed by the PBO and together raise $338b over a decade. The 40% tax would be applied as follows:
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For non-mining corporations with over a $100 million turnover, the tax would apply to their super-profits. Both Australian corporations and the share of a multinational corporation’s operations in Australia would be subject to the tax. The corporate super profits tax would apply to net revenue after deducting income tax and after making an allowance for a fair return to shareholders.2
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For mining projects, the tax on corporations will be assessed on a Australian project-by-project basis, based on the original Henry Review’s mining super profits tax.
The independent Parliamentary Budget Office has calculated the mining component will raise $124 billion over 10 years and the wider component will raise $214 billion over that same period, totalling a $338 billion boost to the fiscal balance. The Greens will announce further details about the super-profits tax on oil and gas corporations at a later date.
40% Corporate Super-Profits Tax Policy in applicationThe following companies are estimated to have the following change in their tax liability based on most recent financial reports.3 Because mining companies would be assessed on a project-by-project basis, it is not possible to estimate individual corporate liability without greater knowledge of individual corporations’ operations.
Profit Current company income tax New corporate super profits tax Total tax paid Telstra $1.9B $540m $300m $840m CBA $8.8B $3.5B $1.3B $4.8B Apple $1.4B* $120m $420m $540m Harvey Norman $840m $340m $190m $530m Ramsay $510m $230m $70m $300m Wesfarmers $2.4B $1.0B $570m $1.6B*Assumes profit attributable to Australian operations is equal to Australian share of turnover.
Super-Profits announced this week- Billionaire Gerry Harvey’s Harvey Norman lifted profits 75% to a record $841 million.4
- Australia’s three biggest miners recorded $65.5 billion profit, and one person - Andrew ‘Twiggy’ Forrest - reportedly personally raked in over $4b.5
Quotes attributable to Greens Leader Adam Bandt MP:
“Big corporations making big profits should pay more tax.
“While everyone else has suffered through the pandemic, billionaire corporations have made out like bandits and profits are at record highs.
“A ‘tycoon tax’ is essential because there’s huge wealth in this country, but it’s being hoarded by a greedy few.
“People want Clive Palmer to send fewer texts and pay more tax.
“By making mining billionaires and big corporations pay their fair share, we can build a better life for all of us.
“The next election will be closer than people think Scott Morrison is only 828 votes away from losing majority government and on current polling, a power-sharing Parliament is the most likely outcome.
“In balance of power, the Greens will kick the Liberals out and push the next government to make billionaire corporations pay their fair share of tax so we can get dental and mental health into Medicare and build affordable housing.
“The Greens are putting Gerry, Gina, Twiggy and Clive on notice. People run this country, not billionaire corporations. These measures have public support and will be a top issue this election, and a top priority in power-sharing Parliament afterwards.
“Gerry Harvey is making out like a bandit while we shortchange our nation’s future prosperity.
“Many of Australia’s billionaires have doubled their wealth during the pandemic while turbo-charging climate change. This has to change.
“Outrageous profits for corporations shows the way that big players have furthered their monopolies through Covid lockdowns.
“Excessive profits are a red flag for an economy. Super profits are a sign that there is a lack of competitiveness, that staff are not sharing in the spoils of increased revenue and that customers are getting ripped off.
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- ABS, 5206.0 Australian National Accounts: National Income, Expenditure and Product, June 2021, Table 34
- An allowance for corporate equity would be made equal to the long-term bond (risk-free) rate plus 5% (equity risk premium). Currently the long-term bond rate is around 1.2%. Eligible companies would receive a tax credit equivalent to the first $100m in turnover so that the tax is effectively marginal.
- For Australian listed companies, publicly available financial reports have been used. For Apple, data from Fortune 500 and ASIC company reports have been used.
- Harvey Norman Press Release, 2021 Results, p. 2
- Peter Ker, ‘Miners to the rescue with $65.5b profits’, Australian Financial Review, 30 August 2021