Statement from Business Council of Australia President Tony Shepherd
The draft report of the Business Tax Working Group reinforces the issues identified in the Business Council of Australia’s submission, including the difficulty of achieving an overall economic benefit from a lower company income tax rate funded by changes to a narrow set of other business tax arrangements.
The Business Council of Australia was always of the view that the terms of reference given to the group made it hard to produce an outcome that made good overall economic sense.
We welcome the report highlighting the economic benefits associated with a lower company tax rate, including greater investment, improved productivity and higher wages, and the need for the company tax rate to be reduced by two to three percentage points to drive a significant investment response.
The report highlights that at a time of significant economic uncertainty and with major shifts occurring within the global and domestic economies, now is not the time to pursue measures to offset a company tax cut when the potential revenue saving from those measures is uncertain.
The Business Council of Australia remains of the view that the measures that were put forward to fund a cut in the company tax rate either could not be accurately costed or posed considerable risk to companies in important sectors.
Business still needs lower company income tax to keep our economy competitive and support jobs and wages growth but this must be delivered as part of comprehensive tax reform, not through actions which will make some companies in some sectors worse-off at a time when they are already under serious competitiveness pressures.
What remains important is that the government commits to the goal of a 25 per cent company tax rate as part of a comprehensive, decade-long tax reform process and as fiscal circumstances permit.
Ultimately, the community deserves a more strategic approach to the role tax can play in supporting higher living standards and a stronger economy.
It is important the work of the Business Tax Working Group is not lost and is used to inform any future tax reform process.