What i really want to know is not only which country items originated, but also where the parent company pays tax. In other words, where does the profit end up? eg, Tip Top bread?
I did the survey on food labelling, but the above knowlege would be equally useful for clothing or any other manufactured items.
Hi @cwmouse, welcome to the community.
It’s a complex question.
Upfront with specific exceptions all consumer purchases and goods sold include the Gst at 10%. One argument put often for broad based consumption taxes is that they deliver tax income irrespective of the supply chain.
Do you have any other particular products and brands in mind with your comment? TipTop is but one brand of many.
Consumer products can pass through many different businesses on the way from raw materials to the shop counter. Everyone along the way supposedly makes a profit. The parent company of a manufacturer may or may not be the business that makes the greatest profit from the sale.
Coca Cola and MacDonalds might also be two multi national brands worth discussing, to reveal the intricacies of the cash flows, earnings and profits.
With TipTop bread it’s manufactured in Australia.
https://connectweb.com.au/news/media-centre/feb-2016/tip-top-bakeries-expands-nsw-operations-with-new-food-manufacturing-facility-in-wyong-shire.aspx
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Welcome @cwmouse!
On the label we have nutritional data displayed a couple of ways and as well as where the product is made, add to that the desire to have the origin of all ingredients. At the same time we have the desire for larger print so such labels are easier to read. You suggest adding the country where the parent company pays tax. You could add to that the question of where the suppliers of the company on the label pay their tax. In some cases there is a long chain going back to raw materials.
All of this is making the label bigger and more detail to be absorbed. The more detail there is the less that will be read. Then we have the desire to reduce over-packaging to reduce the level of waste as we have to dispose of billions of packages and problems with labels that do not degrade or compost readily. Which suggests the labels ought to be smaller not bigger.
Perhaps there is a limit to the amount of data that is sensible to put on a label.
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The label could be large. What taxes, company taxes, payroll taxes, PAYG for employees, sales/VAT/GST taxes, capital gain taxes, fuel taxes, liquor exceses and the list goes on.
Taxes on profit on form a part of the taxes companies pay…and in many cases, a small proportion of total taxes.
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Aside from the complications or any practical needs, simple curiosity might be sufficient reason to enquire.
Out of every dollar we spend on a loaf of bread, a glass of wine, a pair of shoes or a few kilowatts of electricity, etc, etc where does every cent go? This is neither microeconomics nor macroeconomics. Is the question able to be answered, or is it that no one really knows?
In context for 2019 Australia’s Gross Domestic Product (GDP) was estimated at Aussies$1.89 trillions, IE $1,890 billions.
As a simple comparison Australia’s Governments collected approx $560 billions in 2018-19 total revenue all sources. That total includes state levied taxes or charges.
There are detailed breakdowns for both totals, in the links provided. Total government revenues are approx $3 compared with every $10 of GDP.
If TipTop bread is the topic it is just one of a variety of products produced under the brand in Australia. It is owned by foreign company Associated British Foods PLC who acquired TipTop as part of George Weston.
As a multinational ABF has approx 138,000 employees. The figures for TipTop bakeries in Australia at 3,500 employees are a little dated. ABF PLC, Australian subsidiary will be paying taxes on profits made by it’s Australian operations in Australia. And like any foreign investor it has the legal right to transfer the profits after tax paid in Australia out of Australia.
It’s little different to how Australians who invest in New Zealand or through super in foreign equities and property pay foreign taxes and collect profits. The ATO will also tax foreign earnings adjusted for foreign tax credits.
A more detailed view of ABF PLC and it’s profits or losses can be found here.
https://www.abf.co.uk/
Assuming ABF PLC were to publish on the side of a packet of TipTop bread the annual profit of their ultimate parent. Would it be relevant to the product, and would it be current? Annual reports are published months after EoFY. I can’t imagine the plastic bread bags being reprinted at the drop of an annual report. Should we ignore the profits taxed in Australia by the ATO on the Australian owned businesses? The tax years in the UK are also different. (6th April 2020 is the start of the current one.)
Solution:
A practical suggestion might be to offer a QR code on all products to replace all secondary product information other than brand, health stars and expiry/batch dates. That way the informed consumer and their trusty mobile phone can answer any question without needing to read a printed label. Note QR codes usually redirect you to the web for the answers.
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Or, where they move their money to avoid paying tax, or where where they don’t pay any tax, or… !
Rather than focusing on food, would it not be more productive to ask this about the top tier businesses in terms of earnings, most of whom don’t pay any tax, or at best pay very little tax.
Perhaps you could enquire as to why our Government(s) is(are) so reluctant to tax those top busiesses based on their turnover, and keep the tax revenues in Australia.
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These are different things though (where tax is paid v. where profits end up). Both are hugely complex in the case of multinational companies.
As an example for the second one, some profit ends up in the hands of shareholders. When you get all the way down to shareholders who are natural persons (i.e. actual people, not companies, not trusts, …), those shareholders can be anywhere in the world, including in Australia. For a listed company, the body of shareholders changes by the second.
I think that neither of these is even close to practical for putting on labelling. Perhaps the law could require a QR code on the product that takes you to the “answer”. However this is not something that I would advocate for.
How does that work in a discount retail scenario? The manufacturer who affixes the label knows what they sell at (wholesale - but that will vary between retailers i.e. high volume retailers can negotiate a better price - and we don’t really want wholesalers having to attach labels for each retailer) and in theory they know where the money goes (but in reality they don’t because they presumably have independent suppliers of their own) but … they cannot legally control the retail price and they don’t know the ultimate retail price. They don’t know. The label doesn’t know.
I can understand people wanting to know more about their supply chains and the provenance of their goods but …
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Another complication is currency variation. A retailer in Australia selling imported goods may have a bunch of identical units, but which were imported at different times and at different prices in Australian Dollars (due to currency variation). That would make it difficult to give any answers without knowing the exact individual item - but it would be a lot of effort to track this at the level of individual items i.e. over and above the effort to track this for the product as a whole.
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Another complication is fixed overheads that are not directly attributed to cost of goods sold. To some extent a wholesaler has the same overheads for things like HR, payroll, IT equipment, IT staff, building security, administrative support, annoying government compliance (!), … whether they sell an average number of widgets or a large number of widgets.
So if they sell a large number of widgets, for every dollar spent, a smaller amount goes to overheads - and if they sell a small number of widgets, for every dollar spent, a larger amount goes to overheads.
Likewise, there would be an open question as to how those fixed overheads should be apportioned between their different widgets.
They won’t know how many widgets they sell for the year, of each type, until the end of the reporting year (which for an overseas company also won’t align with Australia’s financial year).
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Sounds err, are, umm … Complicated!
1,000 million percent concur. 
Products made mostly or wholly in Australia from principally Australian resources by a 100% Australian owned company might set the gold standard. They are few and far between.
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