Leave Google’s tax alone, Victoria tells Federal Govt


blog Sometimes it feels as though the Coalition Victorian Government just can’t get along with the Labor Federal Government. First there was the time Victoria slammed the Federal Government over forcing the National Broadband Network on it. Then there was the time it said the NBN wasn’t being rolled out fast enough in the state. And today the state’s Technology Minister Gordon Rich-Phillips has gone into bat for technology giants such as Google, defending the search giant against the Federal Government’s attempts to make it pay a fair level of tax in Australia. The Financial Review reports (we recommend you click here for the full article):

“The Victorian government has hit out at federal government plans to reap more tax from global technology firms, claiming it could lead to a major loss of foreign investment.”

To my mind, the best situation that could occur is for the Federal Government to enact the kind of new tax initiatives that Federal Assistant Treasurer David Bradbury talked up last week. It’s hardly fair that Google only pays Australian corporate tax of less than $1 million, off total estimated revenues of $1 billion, after all. However, I’d simultaneously like to see the Federal Government lower the overall corporate tax rate on technology companies operating in Australia, to help stimulate more multinationals into setting up shop in Australia. Even steeper tax cuts should be handed to the IT startup sector as well. Now that’s a combination tax package which we can all agree on. And perhaps the same lower rax rate could be applied to IT media outlets as well? It couldn’t hurt ;)

Image credit: NBN Co


  1. The Henry Tax Review did recommend the lowering of the company tax rate:

    Recommendation 27: The company income tax rate should be reduced to 25 per cent over the short to medium term with the timing subject to economic and fiscal circumstances. Improved arrangements for charging for the use of non-renewable resources should be introduced at the same time.


    I believe the government were going to commit to a drop of 28% over the next five years – or something like that. Though this was before all this fuss over a surplus.

    • I also think there should be a significantly different tax rate for small business compared with big business. Charging a company the size of Delimiter the same tax rate as a company the size of the Commonwealth Bank is just incredible. I have no idea how the Government thinks it’s incentivising small business in Australia, but right now it’s not doing much at all.

      • Stick in multiple rates and it significantly complicates the process. Do you base it on revenue, or profit? As a side note, multiple rates is one of the key reasons they dumped the sales tax system for a GST style approach.

        Base it on revenue, you have companies with high revenue and high costs, they get no benefit.

        Base it on profit, you get the very problem being discussed – Google could very easily be considered small.

        Base it on other incentives; FBT cuts/exemption, or payroll tax, or something similar, where a tiered system would be easier to manage. As usual, not necessarily an easy thing to sort out.

          • Yeah I know, but the whole debate at the moment is around Google (and by extension pretty much every mutltinational) using loopholes to minimise their tax here in Australia. For Google to have only paid $74k in tax, their net profit would be in the order of $200,000. Thats right in the range of where you’re coming from.

            Dont get me wrong, I aqgree with you. I think there should be decent incentives for small business as well, but if you do it through the tax rates its not going to necessarily fix things. It might actually make it worse – what benefits would you like to see, and how much is that worth to a “small” net profit company like Google?

            Lets say they bring some changes in, benefitting all small companies with a net profit of $250,000 or less. A SME in that range gets an exemption for FBT, or payroll tax. Thats millions to Google.

            Or how about only needing to lodge BAS’s annually? Again, savings to large companies in what they pay for accounting at those (usually) monthly lodgement points would add up very fast.

            While its a nice idea, the implementation of these sorts of breaks can be a big can of worms. And to get back to the overall story onhand, its ideas like this getting implemented around the world that has created the problem in the first place.

          • “Tax is always based on profit.”

            With respect the only tax that I know of that is based on profit is “Income Tax”.

            There are a swag of other taxes out there that are charged under a number of names that are not based on a “Net Income” For example GST, Duty, Rates, Fees,and Levies.

            The simple equation is that the Government is expected to provide services and it needs to levy the population to provide those services.

            One of the most inefficient ways of doing this is Income Tax. It is open to abuse, evasion and interpretation. It is costly to calculate and collect. Think of the cost to business of getting the information and collating it so they (or their Accountant) can prepare an Income Tax return. The legislation is a nightmare and the number of highly trained staff required is very high.

            Perhaps we should be looking at whether another means of getting the money for the Government to use should be explored. For instance scrap Income Tax and charge a tax on all financial transactions withdrawing money from an account. I suspect this would mean that Google and others would end up paying an equitable contribution.

          • The Debit Tax, as its called, where every financial transaction gets hit with a small amount, has been mentioned a few times as an alternative. Theres a reason nobody uses it though, and thats because of the massive change it would make to any economy that tried. No Government wants such uncertainty.

            For those wondering, the idea is to simply hit 0.5% of every financial transaction gets collected as tax. Thats it. There are so many transactions every day the taxes raised would allegedly be 50% to 100% more than currently collected. Pay goes into an account, you lose 0.5%. Pull money out, you lose 0.5%. Business deposits what you spent there, they pay 0.5%. And so on. Very very simple, but there are still flaws in the idea.

            End of the day, every solution has issues. And the bigger the issues, the less chance of something realistic actually happening.

          • Pauline Hansen pushed this such a tax way back when. I’m not sure if that really adds much credibility to the case though.

  2. Seriously?? And the states wonder why the feds can’t give them any more money /boggle

  3. Victoria = Baillieu.
    Baillieu = liberals.
    Liberals = big business (Like John Howard did).
    Big Business = want less tax.

    Average of 9-10% was paid in USA by the top 10 companies:


    “Our nation’s tax code has become a powerful enabler of bloated CEO pay,” the study says. It describes how deductions and credits allow companies to give bosses huge pay packages in order to cut tax bills, at a time when the government is running enormous deficits. That’s a controversial conclusion, but before I get into why, here are the 26 CEOs who made more than their companies paid in taxes last year. They took home average compensation worth $20.4 million, while their companies paid little or no federal tax on big profits, says the study.”


    “The report traces how it says Microsoft and Hewlett-Packard took advantage of provisions in current tax and accounting codes to avoid paying U.S. tax on billions of dollars in offshore profits. However, the report does not charge the companies with doing anything illegal as both individuals and corporations routinely take steps to reduce their tax liability.”

    Many of these examples are shown in Europe as well as Australia.

  4. Even Dick Cheney’s Haliburton. A major defence contractor for the US, as well as involved in energy and mining etc is now registered in the tax haven of Dubai I think. One of the Middle Eastern States where they don’t pay tax. As such they do not pay any US tax on the Billions they have made out of the US war in Iraq and Afghanistan

  5. Why lower taxes on corporations? This idea that countries should compete for business needs to be corrected, and countries should be getting together to agree standard minimum tax rates.

    Take away the opportunity for businesses to give a country’s citizens a raw deal, and make business taxes work! Why should a corner shop pay tax at rates far higher than a multinational?

    Oh, and get rid of the ridiculous number of loopholes for businesses and high income earners.

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