The Greens have vowed to push Labor to adopt a new 40% tax on the “super profits” of big corporations if the forthcoming federal election results in a hung parliament.
The party’s so-called “tycoon tax” would target mining companies and other big corporations and would raise $338bn in revenue over a decade, according to costings by the Parliamentary Budget Office (PBO) to be released on Monday.
The leader of the Greens, Adam Bandt, said the next election would be closer than people think and “a power-sharing parliament is the most likely outcome”, resulting in negotiations with Labor on policy issues.
The Greens would seek to use a balance-of-power position to “kick the Liberals out” while pressing the next government to “make billionaire corporations pay their fair share of tax”.
It is understood inequality and climate action would be the top priorities for the Greens in such negotiations, although the party is not setting specific conditions at this stage of the process.
Monday’s announcement indicates the Greens see an opening to target progressive voters dissatisfied with Labor’s attempts to minimise points of difference with the Coalition on tax policy, ahead of an election due by May next year.
“People want Clive Palmer to send fewer texts and pay more tax,” Bandt said in a statement.
There are two parts to the proposed policy: one targeting non-mining companies, and the other targeting mining.
The first part of the proposed policy is a new super-profits tax applying at a rate of 40% from July 2022.
It would apply only to non-mining corporations with annual turnover of over $100m, and only to the profits that go above a certain level (known as a “super profit”).
According to the Greens, the new tax would apply to net revenue after deducting income tax and “after making an allowance for a fair return to shareholders” – the long-term bond rate plus 5%.
The PBO, an independent agency, has estimated this policy will deliver $214bn to the budget over 10 years, while cautioning that there is “a very high degree of uncertainty associated with this costing” because the inputs are “very sensitive to international and domestic economic conditions”.
The PBO said it had reduced super-profits tax paid by 20% to reflect “an estimated behavioural response by companies in order to reduce their tax liability”.
Mining and oil and gas companies liable for resources rent taxes were exempted from this proposal, as the Greens have proposed a related policy targeting that sector.
The Greens have estimated, based on recent financial reports, that Harvey Norman may have to pay the tax office an extra $190m if the new corporate super-profits tax were in effect.
That would be on top of the $340m in company income tax, resulting in total tax paid of $530m out of its $840m in profit.
The party has also estimated that Apple could face a liability of $420m, in addition to company tax of $120m, based on estimated profit of $1.4bn attributed to the multinational’s Australian operations.
The second policy, focused specifically on mining companies, would improve the budget’s fiscal balance by about $124bn over a decade, according to the PBO.
“For mining projects, the tax on corporations will be assessed on an Australian project-by-project basis, based on the original Henry review’s mining super profits tax,” the Greens’ policy document said.
Taken together, the two policies are estimated to add $338bn to the fiscal balance over 10 years.
Bandt said his party was “putting Gerry, Gina, Twiggy and Clive on notice” that “people run this country, not billionaire corporations”.
“These measures have public support and will be a top issue this election, and a top priority in power-sharing parliament afterwards,” he said.
The Rudd government previously sought to introduce a 40% tax on mining super-profits based on the Henry tax review, but faced a significant counter-campaign by the industry and from the Coalition.
The Gillard government brought in a watered down version called the minerals resource rent tax, which the Abbott government axed after coming to power.
Labor’s treasury spokesperson, Jim Chalmers, has said the opposition will go to the next election arguing for “a stronger, more sustainable, more inclusive society and economy after Covid than before”.
In July, Labor decided to support the government’s already-legislated income tax package, saying it would provide “certainty and stability” and clear the decks for the election.
That decision has given the Greens what they see as a political opportunity to go to the election pledging to increase taxes on billionaires and big corporations.
The Greens have already proposed an annual extra 6% wealth tax on billionaires for Australia’s 122 wealthiest citizens, which would raise more than $40bn over the decade.
In that case, the PBO also warned of a “high degree of uncertainty” as billionaires sought to avoid it.