Australia’s corporate sector said that the strong figures released today as part of the Charter of Budget Honesty were substantially a result of the contribution made by Australia’s corporations and should not be taken for granted.
The figures show corporate taxation has grown by 48 per cent over the last three years, with the 2004–05 corporate tax take revised upwards to $40.2 billion. This represents an $860 million increase in corporate taxes flowing to Canberra from that forecasted in this year’s federal Budget in May.
Corporate taxation has been a significant contributor to the social welfare spending commitments and tax cuts undertaken by both major parties.
BCA President Mr Hugh Morgan said: “Australia cannot afford to take this cash stream for granted. The health of Australia’s companies not only impacts on Australia’s capacity for tax reductions and social spending, but also jobs.”
Mr Morgan said a firm strategy needs to be put into place to ensure that the environment in which companies operate remains competitive, in particular by:
- minimising regulation and red tape which decreases the efficiency of companies; and
- ensuring that the company tax rate remains competitive with Australia’s key trading partners, many of whom are actively reviewing and reducing their corporate tax rates.
He also sounded a note of caution to both major parties about how these surpluses should be spent.
“Times of strong economic growth provide an opportunity to undertake significant reform to ensure that benefits will also be available in the future.
“It is essential that appropriate long-term social and economic infrastructure is developed in order to ensure that economic benefits are realised in the future.
“Given the pressures of demographic change and global competition, we need to act now to improve our long-term position.
“An important aspect of this is Australia’s savings. Removing more than $2 billion over the next three years from government expenditure on Australia’s retirement income to fund immediate tax cuts is not good policy,” Mr Morgan said.