MPs weigh potential new tax on digital giants

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THE government’s plan to whack some of the biggest tech companies in the world with a “digital tax” could come to pass.

Senate crossbenchers have indicated they would support the federal government’s $176 billion tax plan in exchange for a tax on digital companies such as Google, Facebook and Uber.

The Coalition government still desperately needs two more votes to get its plan to cut income tax for workers and reduce the corporate tax rate passed by the parliament.

In order recover the potential future losses in revenue, the government could put its hand in the pockets of Silicon Valley firms.

Centre Alliance senators Stirling Griff and Rex Patrick are “100 per cent behind a digital economy tax proposal,” Fairfax Media reported on Monday.

“If the digital economy tax makes the government coffers swell more than they do now, that is very much a positive step,” Senator Griff said.

“As long as there are no cuts to core community services, we’d be receptive to a degree of tax relief for everybody. A lot could happen in six weeks; maybe the company and income taxes can be done by July.”

According to The Australian, Treasurer Scott Morrison is preparing a discussion paper on the issue looking at how Australia can work with other jurisdictions, including the European Union, to make big tech companies “pay their fair share of tax”.

Senator Patrick told the paper his Centre Alliance Party had not specifically linked the Google tax to the passage of company tax cuts but liked the idea of cracking down on tax avoidance.

“We would like to see fair taxes paid by those companies, and at this point in time we don’t think it’s fair,” he said.

The government is trying to get a $140 billion income tax cut plan, as well as a $35.6 billion bid to lower the corporate tax rate for big businesses, through parliament.

The package was a key plank of the latest federal budget and is due for debate in House of Representatives on Tuesday.

Labor supports the first part of the tax cut plan, which starts with a reduction of up to $530 a year under a low and middle-income tax offset. If it wins the next federal election, Labor has promised almost doubling this offset to over $900.

But it won’t back the Turnbull government’s second and third steps, which make changes to certain tax brackets at various stages, until at least the government provides more information on their cost.

The party supports taxing the digital economy, but shadow assistant treasurer Andrew Leigh said it needs to be a permanent solution, not a stop-gap measure. “The policy needs to be evaluated on its merits,” he said.