At his address to the World Economic Forum at Davos in Switzerland on Thur 23.1.2014, the Prime Minister spoke of the need for efficient smaller governments, profitable private businesses, and he also commented on Australia’s role as Chair of the G20 this year and what he would like see agreed on taxation in the globalised economy.
As chair of the G20 this year, Mr Abbott said Australia’s aim is “a communiqué just 3 pages long explaining precisely how good intentions are being put into practice”.
The PM said that, money’s tendency to flow to where taxes are lowest “is a powerful incentive for all countries to keep taxes down”. One of the side effects of globalisation is more ability to take advantage of different countries’ tax regimes, Mr Abbott said. He said the G20 will “continue to tackle businesses artificially generating profits to chase tax opportunities rather than market ones”. In the PM’s view the “essential principle is that you should normally pay tax in the country where you’ve earned the revenue”.
He went on: “My hope is to have a really frank leaders-only discussion in Brisbane about the biggest issues we face, including digitalisation and its implications for tax, trade and global integration, because taxes need to be fair, as well as low, in order to preserve the legitimacy of free markets. For the leaders of the countries generating 85% of the world’s GDP merely to agree on the principles needed for taxation to be fair in a globalised economy would be a big step forward.”
[LTN 16, 24/1/14]