Business Tax Cut Debate Highlights the Pitfalls of Policy on the Run

Statement from BCA Chief Executive Jennifer Westacott

Today’s political debate over whether to deliver business tax cuts linked to the Minerals Resource Rent Tax (MRRT) legislation highlights the pitfalls of developing tax policy on the run.

What is needed is a debate about what is the right tax system to keep Australia competitive in a challenging global economy; provide sufficient revenue to pay for future needs such as rising social services costs, and support higher living standards for Australians into the future.

The BCA remains of the view that comprehensive tax reform, particularly lower company tax, provides one of the greatest opportunities to support the next wave of Australia’s growth.

If the parliament gets bogged down in political brinkmanship over which if any businesses need a more competitive tax environment, or refusing to support an economy-wide reduction in the company tax rate, it will not be serving the nation well.

Raising last-minute amendments, as the Greens have done, is reckless and economically irresponsible as it creates an unpredictable policy environment and adds business uncertainty.

We remain opposed to the MRRT as a poor example of how to undertake major tax reform, but if its implementation is inevitable, it is essential for the strength of Australia’s economy that the tax cut for businesses, large and small, is passed by the parliament.

In reality, businesses of different sizes are deeply interdependent. We contribute to each other’s success and play complementary roles in keeping Australia’s economy strong.

Longer term, lowering company tax to at least 25 per cent remains as important as ever to ensure Australia keeps pace with a growing number of international competitors as a destination for investment and job creation.

While investment in the mining sector is high, investment across the rest of the economy is falling. We need to support investment by making our economy more competitive, including through a more competitive tax system that will support higher productivity and help all businesses, particularly those struggling with the higher Australian dollar.