The losers from the Senate’s failure to give Australia a competitive company tax rate will be Australian workers, through lower investment, fewer jobs and slower wage growth, Business Council chief executive Jennifer Westacott said.
“Without a competitive company tax rate we are at risk of having surrendered in the battle for global competitiveness, and competitiveness equals jobs.
“The Senate’s failure to support a modest company tax cut over the next decade leaves Australia with the third highest company tax rate in the developed world, and at risk of having the highest.
“It is extraordinary that Senators representing states where business investment is so vital have walked away from this for pure short-term political reasons.
“Company tax cuts still have more public support than any political party.
“It could be years before the nation revisits this issue and by then we will be even further behind.
“By leaving company tax reform half done the Senate has voted to impose a huge tax “cliff” on small businesses,” Ms Westacott said.
Under the system the Senate has created if a small company’s turnover increases by just one dollar to reach the $50m turnover “cliff”, it will be immediately liable for an additional $125,000 in company tax, if its profit is 10 per cent of its turnover.
“The 10 million working Australians employed by businesses will not be competing on a level playing field until this issue is resolved.
“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.
“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.
“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.
“If we do nothing to shore up the competitiveness of our economy, we’re throwing away control over our own destiny. We will be at the mercy of external economic forces.
“Only a competitive economy, attracting the investment we need to keep Australia growing can sustain the world class services Australians expect, create the new jobs we need and provide the growing wages Australians deserve.
“Until we act, over 5,000 businesses that employ around 4 million working Australians will be saddled with one of the highest company tax rates in the developed world.
“We need a plan to make Australia more globally competitive, one that creates new jobs and locks in the investment we need to keep Australian living standards high.
“The blame for this failure lies at the feet of the Opposition. The economic case for this policy, which they previously supported, remains overwhelming.
“We understand the politics is difficult but as a nation we simply can’t get things done anymore.
“We thank Mathias Cormann for his leadership and persistence. We also thank the Prime Minister and the Treasurer for maintaining their support for this vital policy.
“This remains the most comprehensive policy on the table to drive economic growth and Australian’s living standards.
“Australians expect and deserve better and want our politicians to advance the cause of the nation.”
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