Why You Should Be Worried About The Australia Tax Inquiry Now More Than Ever

Why You Should Be Worried About The Australia Tax Inquiry Now More Than Ever

Hell hath no fury like a Government scorned. At least that’s the message that came out of Parliament both last week and yesterday afternoon when the government slapped legal orders on Apple, Microsoft and Adobe to force them before the Australia Tax inquiry. Before we all collectively congratulate the government for showing its teeth to the private sector for a change, we need to understand what a gamble this is for the inquiry.

More: Beating The Australia Tax: Can The Government Do Anything To Stop It?

For those out of the loop, the Australia Tax Inquiry — or the IT Pricing Inquiry as it’s known in government — is a direct response to the high prices charged for products sold locally by some multi-national tech giants. Specifically, a committee, spearheaded by Nick Champion and Federal MP for Chifley, Ed Husic, wanted to find out why the prices being charged in Australia for tech were higher than prices being charged in territories like the US for exactly the same products.

Several companies and IT industry groups have already testified, but the big guns at the centre of the inquiry — namely Microsoft, Apple and Adobe — stayed silent on the issues presented. Apple, for example, staunchly refused to even respond to the existance of the inquiry, only showing compromise once when it offered a closed-door, off the record briefing to government officials. For those of you playing at home, that’s not exactly how open government is meant to work.

So now the inquiry has no choice but to slap subpoenas on companies to get its way and have them appear to testify. The government doesn’t want to be in this position, and for good reason, too.

The legal summonses issued to the three companies in question yesterday compels them each to appear before the inquiry, but don’t let the presence of legal orders fool you: this is no courtroom. Nobody is on trial (although you could be forgiven for thinking they were) and there’s no jury, judge or prosecution to speak of. To satisfy the legal orders, all Apple, Microsoft and Adobe need to do is send a communications professional well-versed in the art of “no comment”, and they win.

As far as we understand it, the companies aren’t compelled to spill the beans on everything the inquiry wants to know. Nobody is under oath here and “trade secrets” will probably be respected. All the tech giants really have to do is blame the price disparity on the stock-standard excuse that seems to underpin this inquiry: the high cost of doing business in a territory like Australia.

It’s a classic excuse, but not one that really explains anything to do with the fact that it would be cheaper in some cases to fly to the US and back to buy the products in question, rather than buy them in Australia.

If these companies show up under legal orders and say approximately nothing to the government about why the so-called Australia Tax exists, then the government is in a worse position than it was before when the tech giants refused to appear.

Subpoenaing and summoning the worst offenders of the Australia Tax before government is a one-use only play. It can’t be repeated without making the whole process look foolish. If these companies continue to BS the inquiry even before its very eyes, then it undermines the legitimacy and objective of the whole process. The government is looking for results here, and it’s taking a gamble to get them. I just hope it plays out the way the government wants it to.

Roulette image via Shutterstock