Labor will warn several of Australia's largest miners and gas explorers they could lose the trust of the Australian people and foreshadow a tax crackdown on some of country's biggest employers.
In a stinging rebuke of Australia's third-largest industry, Labor frontbencher Andrew Leigh will dress down an audience of executives over billions of dollars in tax avoidance, opening the door to a new mining tax-style campaign from industry in the lead-up to the next election.
"What is legal is not always moral or economically sound," Dr Leigh will tell the Australian Petroleum Production and Exploration Association at their own conference on Friday.
"One reason most of us pay the taxes we owe is that we believe we live in a society where our fellow citizens do the same, bad apples can spoil the whole barrel."
The shadow assistant treasurer will tell executives from BHP, Chevron and Shell, that if elected, Labor will force companies to report a specific tax haven exposure to shareholders, compel them to state their country of domicile for tax purposes, provide extra incentives for whistleblowers, and beef-up staff numbers at the Australian Tax Office.
"Let's put it plainly: there are a lot of crooks in tax havens," he will say, citing research from Berkley professor Gabriel Zucman that found up to 6 per cent of GDP or $100 billion was held offshore by wealthy Australians.
"The people in this room think hard about tax every day. You know that the integrity of the system rests on people feeling faith that everyone is paying their fair share. That sometimes things can be legal, yet push the bounds of being ethical."
In August, Chevron abandoned its appeal against the ATO in the High Court and reached a settlement understood to be worth more than $1 billion over its use of transfer pricing to push income and debt from Australia into tax havens.
The precedent will shape all future tax arrangements for multinational resources companies and is expected to score a $10 billion windfall over the next decade.
"While competition between countries is usually healthy, the race to the bottom in company tax rates can be distinctly unhealthy, particularly when firms use accounting tricks to shift profits to the lowest-tax country," Dr Leigh will tell the Adelaide audience at the Stamford Grand.
"Public health and education services are threatened by the erosion of the tax base by tricky tax tactics."
He will warn that the public's lack of confidence in the tax system will drive populism, and eventually push away foreign investment, forcing consumers to wear the cost.
"Labor's concern about multinational tax fairness doesn't stem from a fear of foreigners. Quite the opposite, we believe that unless the rules are fair, we won't be able to maintain strong support for openness," he will say.
"Yet if the public doubt that multinational firms will pay their full share of tax, it will be difficult to maintain public support for openness."
The ATO collected an extra $4 billion in revenue from underpaid tax by multinational companies last year.
