Tuesday, June 17

Apply accounting principles to multinational tax concessions

My letter as per below published today in the AFR with a cartoon. 

In “Tech has left tax system behind says Google(AFR, June 12), Paul Smith reports that the head of Google Australia wants governments to clarify grey areas in the global tax system and end the shaming of individual companies for how they transfer profits around the world.

However, the accounts of Google and other multinationals which legitimately take advantage of low-tax regimes don’t coincide with normalised accounting principles.

The numbers booked in the case of Google don’t include advertising revenue of up to $2 billion, which is accounted for in more favourable tax locations such as Singapore and Ireland.

Favourable tax principles are applied to the cost of Apple computers and iPads sold at a cost in Australia that ensures profits are booked primarily in the lower tax regimes, such as Ireland.

What is evident is not only the foolishness of countries offering extraordinarily generous tax concessions but a lack of a co-ordinated effort to ensure commercial principles are upheld in assessing tax liabilities.

Hopefully Prime Minister Tony Abbott will follow through on his remark made while in the US, that he is serious about leading global efforts through the G20 to stop tax ­evasion through profit shifting.

What is needed is the application of recognised accounting principles to tax, so that profits and revenues are either included or deemed to be included where multinationals do business, in assessing taxation liabilities

Friday, June 6

Ill-advised medical fund is weird science

This letter was  published in the AFR on the 6th June 2014.

In “Basic science research under-funded” (AFR, June 3), Joanna Mather contends the federal government is under growing pressure to justify its decision to focus on medical research while cutting other science programs, as official figures show investment is already heavily skewed toward studies in medicine.
What is evident is the proposed creation of the new $20 billion fund for medical research was formulated with virtually no consultation from our leading scientists.
They would have advised the fund risks being largely ineffective without integrated support from the other science areas which are being cut.
Liberal backbencher Dennis Jensen, who has a PhD in materials science and physics and experience as a research scientist, contends it is not good policy to massively increase medical research when you are making heavy cuts to the CSIRO, the Defence Science and Technology Organisation, the Australian Nuclear Science and Technology Organisation, the Australian Research Council and the Australian Institute of Marine Science.
He laments the absence of a science minister, noting “not a single G8 nation lacks a dedicated science minister, and this bodes ill for our future’’. But Prime Minister Tony Abbott foolishly ruled out a science portfolio, claiming ministers could take an integrated approach where scientific matters are involved and seek relevant departmental advice.
The budget’s piecemeal approach indicates no such consultative action has been taken, and the skewed outcome severely undermines the nation’s future to invest wisely in science and technology to secure our future prosperity.