The Usual Suspects: oil and gas majors star in Australian tax heist

Finance & Tax||
Top40 Tax Dodgers
Who will dominate the Top40 Tax Dodgers charts this year? Curtain-raiser. Image by Alex Anstey

Angus Taylor’s rescue package for the oil industry is a testament to the ability of large corporations to game governments. The latest Tax Office transparency data shows that oil and gas juggernauts are, again, Australia’s biggest tax cheats, yet are demanding and getting more public subsidies to prop up their oil refineries. Michael West reports on the good and the bad in multinational tax dodging land.

Imagine making $13.3 billion and paying no income tax for the year or, even better, raking in $56.5 billion over six years and paying nary one red cent in tax; a big fat donut. 

Would you care to pocket $5.6 billion for the year, a la Viva Energy (formerly Shell’s petrol business), and pay no income tax?

Then how about this? Drum roll, trumpets, lights – good old Energy Minister Angus Taylor bobs along with his $2.3 billion oil industry rescue package and slings you some taxpayer money in case you were thinking of closing your oil refinery.

How good is not paying tax AND getting public subsidies? 

If this government were transparent, and inclined to disclose how it spends our money, we might also find the big foreign oil and gas companies have been claiming JobKeeper too. Sadly, there is no public register. 

The present flood of hand-outs for large corporations is of Biblical proportions. If you are a very large company, never has there been a softer touch  for subsidies than the administration of Scott Morrison and Josh Frydenberg.

It is true that during a pandemic, defending the economy with public cash is defensible. However, the corporate titans, many foreign-owned, have already been fleecing us dry on the tax front.

Jiggling the data 

Each year, just once a year, we get to see how much tax the biggest companies in the world are, or are not, paying in Australia. It came last week, the annual Transparency Report. 

So keen is the Government to gloss over the scam that is multinational tax avoidance that, back in 2017, it snuck forward the release of the annual Tax Transparency data to coincide with the drama of the Marriage Equality vote; almost to the minute. 

So it was that, around 5pm on the evening of December 9, just as jubilant scenes were erupting across the country and politicians were actually hugging in Parliament, the Tax Report landed.

Kellogg’s hits taxpayers, small business and health

The grey men and women of government media manipulation have since become more sophisticated. Rather than wait for a “big news day”, now they drop a suite of briefing papers and press releases to select journalists the day before the annual tax data drops. 

In this way, journalists focus on the government’s message and not the actual numbers, such as ExxonMobil paying zero tax again, or similarly, Rupert Murdoch’s News Australia Holdings for that matter, or Chevron, Vodafone, Virgin and Lendlease paying zero. Or Qantas or Shell and the coal seam gas frackers paying little or nothing.

We will get to the goodies and the baddies of 2020 shortly. Suffice to say that the Government’s message, promoted in the media 12 hours before the real data was released this year, was that corporate tax avoidance in Australia has been vanquished. It’s all over, they reckon, all but $2 billion.

You see, they refer to a metric called the “Tax Gap”: 

“The tax gap is an estimate of the difference between the amount of tax the ATO collects and what we would have collected if every taxpayer was fully compliant with tax law.”

The Tax Gap of the Large Corporates this time around is $2 billion, the government reckons. In other words, it claims there is virtually no problem with large corporations avoiding tax in Australia. End of story.

Australia’s Top 40 Tax Dodgers 2020: fossil fuels dominate once more

Government’s Large Credibility Gap

The problem with this view of the world, apart from the fact that it is manifestly false, is that the Coalition was saying the same thing back in 2013 and 2014 when calls were increasing for a parliamentary inquiry. “Nothing to see here,” was the line, just as it is now. 

This is the reality:

  • Corporate tax avoidance is rife
  • Billions are being siphoned offshore to tax havens
  • The Tax Gap for Exxon alone is probably $2 billion at least
  • It depends on how you calculate a tax gap
  • Oil and gas companies are again appalling tax avoiders
  • The FAANGs (Facebook, Amazon, Apple, Netflix and Alphabet, formerly known as Google) are still a huge problem
  • The big banks, BHP, Rio Tinto and a few large domestic companies pay the lion’s share of corporate tax in Australia.

The Senate Inquiry into Corporate Tax Avoidance in 2015, which turned out a resounding success, was opposed by the Coalition but the reforms it enacted since – including this very tax transparency list – are bringing billions of dollars into the national coffers.

Tax Office commissioners will tell you that behaviours have changed at the top end of town. Being perceived to not pay one’s fair share can have reputational and financial consequences.

But the game of multinational tax avoidance, played by so few with damaging ramifications for so many, will never be won. The stakes are too high.

The bits and pieces

Looking at the data, the owner of News Corp’s stake in Foxtel, control of which has just mysteriously passed to an unidentified entity controlled by Rupert Murdoch in the secrecy jurisdiction of Delaware, is NXE Australia.

NXE Australia recorded total income of $2.99 billion last year, eradicated all taxable income and paid no tax.

IKEA is back to its bad old ways. It had started paying a modest amount of tax in Australia but in 2019 notched up $1.4 billion in total income and wiped out its tax obligations entirely.

Contrast that with local furniture maker Nick Scali, which showed total income of $266 million, taxable income of $59 million and tax payable of $17.7 million. 

Lendlease continued its abominable track record of paying large salaries and shareholder dividends but nought to the taxman. It disclosed income of $10.4 billion; zero tax paid.

Qantas finally came good on the tax front after four years of zero, one year of just $10 million and now a whacking $259 million in tax payable. The most recent amount of tax paid finally surpasses the remuneration of chief executive Alan Joyce. Airlines are tough to run, and Qantas’s poor track record on paying tax is testament to its enormous tax losses which it matches off against profits, year after year.

Now, however, with the gigantic Covid subsidies the company soaked up, it is time for a serious discussion about the obvious – that is, capping the length of time that tax losses can last. Other countries do it. Next year, Qantas will again pay no tax and for many years after. Time to cap the timeframe for claiming tax losses.

Then there is the energy sector, gas and electricity, which again has excelled in ripping off a nation.

The two Ausgrids, now privatised, raked in $476 million and $658 million in income apiece and kicked in zero tax.

While the Government is fretting about its trade war with China, the Chinese are niggling us on the tax flanks. CNOOC Gas and Power notched up $1.8 billion in income and paid zero tax.

Victoria Power Networks, controlled by the Chinese and selling electricity via Powercor and Citipower, recorded $1.6 billion of income, and zero tax.

Spark Infrastructure? Similar deal.

Now controlled by the CK Group in Hong Kong, Australian Gas Networks Holdings paid $1 million on $617 million.

The LNG export boom has truly been a disaster, with tens of billions in losses, rampant domestic gas prices, and not much paid in royalties or tax.

Against that backdrop, ConocoPhilips Australia Gas Holdings showed $1.6 billion in income and zero tax, Woodside $8.2 billion, $2 billion in taxable income yet still no tax.

Australia Pacific LNG disclosed $7.2 billion income for zero tax (that’s Origin ConocoPhillips and Sinopec), Shell’s fracking company QGC Upstream Holdings – a veteran and egregious non-taxpayer – had income of $4 billion and zero tax. Santos $4.3 billion and zero tax, and Shell Upstream Holdings $5.5 billion and zero tax. All a bit repetitive?

It is no wonder the gas lobby has swung the government behind its “gas-led recovery” thinking. They need to recoup their losses before gas assets are stranded.

There were some bright spots. Beach Energy notched up $2 billion income and $192 million in tax. Caltex and BP were once again respectable taxpayers, while EnergyAustralia, until last year a tax pariah that sucked out billions via its parent in the notorious British Virgin Islands, paid a whopping $800 million in tax after last year’s $370 million.

The blights remain though. Chevron with its $12 billion and zero tax, Ichthys with its $802 million and zero tax, Puma Energy with its $3.5 billion and zero. Origin, no stranger to tax chicanery, posted $180 million on its almost $16 billion of income.

​Coming soon: the Top 40 Tax Dodgers rankings for 2021.

Glencore, media battles and the pitfalls of fighting a multinational





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