There is always plenty of discussion regarding international tax avoidance. Multinational companies use transfer pricing amongst other methods to reduce and avoid paying taxes in the country where their goods or services are sold. I’m also hearing people calling for lower corporate taxes.

One way to deal with both issues would be to introduce a Foreign Exchange Tax. I see that China has introduced something similar although presently they have set the rate at 0%.
https://www.bloomberg.com/news/articles/2016-03-15/china-said-to-draft-rules-for-tobin-tax-on-currency-transactions

I’d like to see a 1% FET levied on every dollar that leaves the country. The revenue gained could be used to lower business tax by 2% and lower the 19% personal tax rate by 1%. It could be setup so that whenever we buy something or transfer funds the banks know if the money is being sent offshore and tax it there. Similar to how the BAD & FID taxes were applied by the banks.

Over the long term I’d like to see Corporate/Business tax at 10%, GST at 10%. I’d also like to see the lowest personal tax rate set at 10% and extend the upper threshold as far as possible c$80k. And this would be funded by a 10% Foreign Exchange Tax.

The net effect is to catch all transfer pricing arrangements and at the same time provide domestic businesses with a more level playing field.

Could this be implemented?

One,

The article indicates that the tax has not been introduced, it is only in a draft stage and has not even got basic approval, and is not likely to for the very reasons set forth in the article.

It makes transactions difficult, and stops the circulation of money, and hinders trade.

Such a tax, while intended against big companies, would in fact hurt families whose members live in different countries when they send their after-tax money to each other. It would also hurt international charities.

It's better to tax companies: incorporation is not a "right" and people, Australian or otherwise, always have the option of trading in their individual capacity.

If we don't like either companies in general or certain types of companies and their excessive profits, then all we need is to stop recognising them as separate legal entities and charge the individuals in question the same tax like everyone else.

China is a poor example: they are tyrants, they harass their own people and everyone else around them. So long as they occupy Tibet, no one should trade with them.

Individual tax rates can be lowered by moving the responsibility for all forms of social-support from government to public charities. It requires a cultural change and it doesn't mean that people will suddenly contribute less of their income to help their fellows and good causes, only that they will now do so voluntarily.

Shadow Minister

I don't see that a FET makes transactions difficult. It makes foreign transactions more expensive but at the same time consumers have more disposable income with which to buy foreign goods and services if they choose.

And there's no hindrance to trade at all. Businesses would be free to enter into the same trade arrangements as they do now.

Yuyutsu

The tax isn't just aimed at big companies. It's deliberately aimed at all funds exiting the country.

Families with members overseas would benefit somewhat from a lower income tax. Individuals and charities are also free to send goods and services overseas tax free. The tax would only apply to money.

I don't think anyone has a problem with the size of corporate profits. The issue is one of fairness and whether all entities pay their fair share of tax.

Dear One,

Talking about fairness, how is it fair that some people pay less tax because they call themselves a "company" while others would be fully taxed because they are just a "family"?

Families keep their money with different members at any given time, often because their country is considered at less risk of wars and the like - such money does not really belong to a particular member and would normally not be generated in Australia to begin with or even be associated with "income", but is simply passed down the generations as a security for those who may be in need or in trouble. I see nothing fair in taking away the money of someone who perhaps lived 100's of years ago, paid all the taxes and rather than spend the rest on themselves preferred to save it for their future generations. That their money happens to pass through Australia (which might not have even existed at the time) should have no consequences.

If there must be a tax, then income tax is the fairest!