Tax on cash flows would be an easy win

December 1, 2025

Apart from the unfair distortions in our tax regime, like negative gearing and capital gains concessions, a most obvious source of significant revenue is from the large number of multinationals (probably all of them) who shift profits off-shore by charging immense fees to their local entities.

The Productivity Commission presented the government with a neat solution to this, namely a 5 per cent tax on cash flows. Profits are so easily manipulated by companies that there is one set of accounts for shareholders and one set for the ATO. Revenue is not distinguishable and should be the basis of taxation. How different is this concept from the GST? The cash flow proposal has great merit by providing incentives to invest back in Australia and targets companies whose interests are not those of the Australian electorate but their overseas shareholders. Courage, Albanese! This would be an easy win which would raise tens of billions of dollars.