Yahoo Finance Major plan to tax Australia's biggest companies over 'excessive' profits: 'Enough is enough'
The Greens want to slap a 40 per cent tax on companies that make more than $100 million a year.
The Greens want to tax Australia's biggest companies to crack down on their "excessive profits". The Robin Hood plan aims to take from Australia's best performers and give it to those who are doing it tough.
The likes of Wesfarmers, Telstra, Coles and Woolworths would be targeted under a three-pronged tax system that would then help the government fund cost-of-living support measures. The first prong would involve a 40 per cent tax to target “excessive profits of big corporations”.
That plan alone is expected to generate close to $300 billion over the next decade.
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Greens leader Adam Bandt will outline his plan on Wednesday at the National Press Club.
“It’s time to make the big corporations and billionaires pay their fair share of tax,” he will say in his speech.
"Big corporations across the economy have squeezed hundreds of billions of dollars out of the public since the end of the pandemic - too much of it tax-free.
"Enough is enough."
How would the Greens' tax plan work?
The 40 per cent tax on excessive profits would apply to any Australian corporations or multinational operations in Australia that earn more than $100 million.
The Greens' plan will also allow for a “reasonable rate of return” for shareholders at 5 per cent plus a long-term bond rate.
This would see Australia's biggest ASX company by market cap, Commonwealth Bank, pay an additional $1.5 billion on top of the $4.1 billion domestic tax it paid in 2023.
Another prong would apply to offshore gas and oil companies by amending the petroleum resource rent tax and forcing them to pay royalties. That plan is expected to raise $111 billion.
The last part of the plan would include a 40 per cent tax on the "super profits" of mining projects, but lithium and nickel mining would be exempt.
All three policies have been estimated to inject $514 billion for the 2024-25 financial year.
Issues raised about the money
Behind the PBO’s $296 billion costing for the excessive profits on big corporations was a warning that there was a “high degree of uncertainty” with the costing, with the independent body warning that “caution should be taken when interpreting the results”.
“The main component for the excessive profits tax is very sensitive to international and domestic economic conditions,” the analysis read.
“Company after-tax profit represents the net of two relatively large revenue and cost amounts which themselves can be quite volatile. The value of shareholder equity can also fluctuate over time.”
It said there was also “inherent uncertainty” in how companies would respond to the proposal, which may include “altering business structures,” and “changing their level of equity or debt”.
What would the Greens do with all that money?
Bandt said the government could funnel the billions of dollars into cost-of-living measures to pull Aussies out of debt and stress.
He explained that it could be directed to building more affordable homes to fix the housing crisis or could see dental work put onto Medicare.
“Because your teeth should be included as basic healthcare,” he will say in his speech.
"It will provide huge amounts of much-needed funding to redirect to everyday people and it will reduce the cost of living."
The Greens demands could hold more sway after the federal election, as Labor is expected to fall into a minority government.
- with AAP and NCA Newswire
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