EDITORIAL: Backpacker tax will raise little compared to the amounts lost to questionable big-end tax minimisation methods

SOUNDING like an Antipodean Donald Trump, Prime Minister Malcolm Turnbull hit the airwaves on Thursday morning to savage the Labor Party over the backpackers’ tax.

Struggling to get the planned 15 per cent tax through the Senate, the prime minister argued that Labor wanted “Australians to pay more tax than rich white kids from Europe who come here on their holidays . . . and Pacific Islanders working here to send money back to their villages”.

Given the sound and fury in Canberra over the backpacker tax, a casual observer could be forgiven for thinking that the impost on holidaying workers was the difference between the nation sinking or staying afloat.

In 2015, when the backpacker tax was first announced, the government estimated that its original rate of 32.5 per cent was going to raise $540 million over three years. With the rate now likely to be 15 per cent or less, the eventual three-year take is set to be about $250 million, or about $80 million a year.

This is not to say that the tax may not be justifiable. In all probability, it is.

But the louder the government screams about backpacker taxes, the more it seems the Coalition is trying to distract the electorate from some real problems in our tax system: namely the tax minimisation methods of large multinationals and wealthy individuals, who are apparently often able to pay far less tax, in percentage terms, than the vast bulk of Australians taxed as employees.

Earlier this week, the Commonwealth auditor-general raised substantial question marks over some $5 billion – that’s $5000 million –  in resource royalty tax deductions claimed by companies operating the North West Shelf oil and and gas project.

The auditor-general said his investigations had only scratched the surface, and that the evidence showed the problems were “much greater” than he had quantified. And in another case to emerge from the Project Wickenby investigations, the family founders of a well-known fruit juice brand have reportedly had $45 million “frozen” after details of the family’s tax practices were revealed in court case.

Average Australians have no recourse to such methods, with little choice but to pay the tax they owe. When you add in a government still banging the welfare drum, we have a system that comes down hard on the minnows, while ignoring the whales.

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