“Australians want a stronger economy that can meet global challenges and deliver opportunity, jobs and wages. That’s why they deserve a balanced debate on company income tax,” Business Council Chief Executive Jennifer Westacott said today.
“Australians benefit when Australian businesses are more globally competitive. It results in more jobs and better paying ones”.
“As we approach the Budget and an election it is vital the community is presented with a balanced argument on company income tax, but comments today in the media would have them believe there are few benefits from more competitive business taxes,” Ms Westacott said.
“Comments by Dr Janine Dixon of the Centre for Policy Studies that the long-term benefit of lower company tax flows to foreign investors and not national incomes reflects a highly theoretical view of the world rather than the reality of how Australia, in the context of a global economy, operates.
“First and foremost, it assumes that investors will continue forever to accept lower returns to invest in Australia, as opposed to simply taking their investment elsewhere to more competitive countries. Company tax rates matter for attracting investment in a global economy, and Australia’s economic prosperity has been built on us being a net importer of capital investment.
“The idea that we should accept an uncompetitive company tax rate suggests we ought to be happy losing out in the global battle for investment. If you extend this to all of our high costs – whether it is environmental laws, labour, or regulation – it assumes investors and businesses will always want to stay here because they like us.
“This investment – whether it comes from domestic or foreign sources – means a bigger business, newer machinery, better technology, more productive enterprises; and this provides the capacity to employ more Australian workers and pay them higher wages.
“Treasury has shown more than half of the benefit of company tax flows to workers through jobs and higher wages over time.
“In its March 2015 tax discussion paper Treasury says: ‘While company tax is paid by companies, the burden is passed on to shareholders, consumers and employees. A more competitive business tax environment would encourage higher levels of investment in Australia and benefit all Australians through increased employment and wages in the long run’.
“With Australia’s businesses paying one of the world’s highest company tax rates and with 40 per cent of Australians to be pushed into the top two tax brackets within a decade because of bracket creep we need a more balanced debate on our tax system.
“Australians deserve a proper debate on company tax – because it is one of the best levers we have to grow the economy faster. When the economy grows, all Australians benefit,” she said.
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