The business community commends the Government’s continued commitment to deliver Australia a competitive company tax system, Business Council of Australia chief executive Jennifer Westacott said today.
“We are disappointed the reduction to 25 per cent could not be legislated today but we respect that the Senate is giving proper consideration to such a vital policy.
“Ultimately, we need the Parliament to adopt the common-sense and fiscally responsible policy to gradually reduce the company tax rate by five percentage points over a decade.
“Every day we delay this we are handing opportunities to other countries – who are cutting their taxes – to get ahead, attract investment and create jobs.
“We need to put Australian workers first by ensuring Australia has a competitive company tax rate that allows all businesses – small, medium and large – to invest, expand, create jobs and deliver higher incomes.
“The benefits of a more competitive company tax rate are overwhelming and it has been independently and rigorously modelled and supported by experts such as the IMF, OECD and the Australian Treasury.
“It is why both sides of politics have over the years supported and acted to make reductions to keep Australia’s company tax rate competitive.
“If we fail to grasp this opportunity, we are leaving on the table a policy that will increase the economy by $18 billion a year in today’s dollars, that’s an additional $180 billion over 10 years.
“This is a vitally needed reform to turbocharge the Australian economy for the benefit of all Australians by enabling businesses to grow, create new jobs and invest in the future.
“Small, medium and large businesses are the engine room of Australia. They employ 10 million people, support the retirement savings of almost six million Australians and this year will pay over $80 billion in company tax.
“We encourage senators to use the parliamentary winter recess to talk to small, medium and large business operators and their workers about the benefits to all Australians of reducing the nation’s uncompetitive company tax rate.
“The plan on the table would strengthen the economy, attract more investment, and create more jobs and the conditions for higher wages.
“It will help small businesses that depend on successful larger ones.
“We are kidding ourselves if we think we can impose one of the highest tax rates in the developed world on Australian businesses and expect them to continue to thrive, invest and create jobs.
“The business community will continue to fight for sensible and meaningful tax reform because it is in the national interest.
“Australia’s 30 per cent company tax rate has been left unchanged since 2001 while our major rivals have acted to reduce the burden on businesses, workers and their economies.
“Labor’s announcement this week that it would reverse the bulk of already legislated company tax cuts for smaller businesses is a blow to Australia’s competitiveness and a blow to the workers of Australia who require businesses to be successful.
“It also undermines confidence and the ability to plan for the future, including hiring workers.
“If you stand for workers, you have to stand for businesses because business employs 10 million Australians.
“Despite arguing for a lower company tax rate when it was last in government, Labor’s rejection of a more competitive rate now remains disappointing and hands a competitive advantage to other countries that are taking action.
“We’re not a cottage industry economy. We are a big economy and we have globally facing industries. We need to give them the competitiveness they need to thrive.
“The Senate acted wisely last week to pass personal income tax changes but it is now difficult to see, going forward, how we will be able to afford sustainable tax relief if the economy isn’t given the right conditions to grow more strongly.
“Tax reform is built on the twin elements of driving economic growth and delivering relief to households.
“We cannot be left with a high company tax rate and a two-tiered complex tax system, which makes it more difficult to attract investment, and discourages companies from expanding, innovating and hiring more workers.
“We cannot hand our destiny to other countries. The one thing we can control is the settings that can help drive productivity growth, including tax settings and we have just thrown in the towel. Investment together with innovation and risk taking are critical for productivity.’’
“Real fairness is about ensuring people can access good jobs and growing incomes in a more prosperous country that has the capacity to support a strong safety net for the most vulnerable.
“The total company tax collected – even with the implementation of the Enterprise Tax Plan – continues to rise and will reach $100 billion a year by 2021.
“Australia’s company tax rate has been frozen for the past 17 years while our international rivals have moved to make their company tax rates more competitive.
“The United States slashed its federal company tax rate earlier this year from 35 per cent to 21 per cent. The United Kingdom has legislated to reduce its rate from 19 per cent to 17 per cent.
“France, which has traditionally put high taxes on business, has said it will cut its federal rate from 33 per cent to 25 per cent.
“The average company tax rate across the OECD today is 24 per cent while across Asia it is 21 per cent.’’
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