Tobacco companies contribute more in building hospitals, roads and schools

Australian tobacco companies contribute more in building hospitals, roads and schools around the nation than any other group of multinational corporations that operate in the country. Analysing the financial statements of the three major tobacco companies in the country, Philip Morris (Australia) Ltd, British American Tobacco (Australasia Holdings) Ltd and Imperial Tobacco Australia Ltd, Fairfax media discovered that they not only pay excise in billions to both state and federal governments but also strictly adhere to the accounting standards and pay the correct amount of tax.

Fairfax media (SMH), on completing the four-year investigation into the financial statements of Australian multinational corporations that included of global digital companies such as Google , Apple , Facebook, eBay and PayPal, betting giant William Hill , resources giants such as Glencore , Rupert Murdoch's media empire News Ltd , major drug companies, including Pfizer, oil giants Chevron and Shell and services juggernauts Serco and G4S, found out that these companies hardly complied to the accounting standards and submitted their financial accounts filled with dubious tax schemes.

In contrast, the cigarette manufacturers are pulling their weight by paying in millions. Philip Morris, which posted revenue of AU$3 billion last year, paid almost AU$2.1 billion in government taxes. Actual tax paid was AU$247 million from a profit of AU$502 million.

The British American Tobacco managed AU$6 billion in sales last year. Of that, almost AU$4 billion went in government levies even before the company made a profit of AU$1.2 billion and recorded AU$455 million in income tax paid.

The smallest player in the sector, Imperial Tobacco, recorded sales of AU$656 million, a profit of AU$31 million and tax paid of AU$11 million, although its accounts were not as clear as its peers. It has been reported that the financial accounts of these tobacco companies have been, so far, the cleanest among others. They have provided "general purpose" accounts too, audited by PwC, rather than the "special purpose" accounts favoured by most multinationals.

The distinction between the two is significant as the latter require a much lower standard of disclosure. Thus, these types of accounts make it difficult to impose tax on things that are kept hidden.

While speaking to Fairfax Media, University of NSW accounting academic Jeff Knapp said the tobacco companies and PwC have been taking care of their financial statements whereas other multinationals are failing to the path at an alarming rate. "If Philip Morris can put together general purpose financial statements, why can't other multinationals? If they can pay the effective corporate tax rate of 30 per cent, why can't the others?" he said.

Contact the writer at feedback@ibtimes.com.au, or let us know what you think below.