The report into Australia’s tax competitiveness confirmed that key areas of Australia’s tax system are not competitive and need immediate reform.
While the International Benchmarking report showed total tax take in line with other developed countries, it highlighted that tax rates on and treatment of key sources of Australia’s economic growth were not competitive.
In particular, the report confirmed the BCA’s research released last October that Australia’s overall business tax burden was the third highest among developed countries.
As the BCA research found, the report confirms Australia’s headline corporate tax rate is above the OECD average and factors such as Australia’s stricter depreciation regime made the overall corporate tax burden significantly higher than Australia’s competitors.
The report also confirms that Australia’s tax rates on higher income earners, which need to be competitive to attract skilled labour, are higher than the OECD average.
BCA Chief Executive, Ms Katie Lahey, said that from a business perspective, the report conclusively demonstrated that beneath the overall tax take figures, there are emerging problems in key areas of Australia’s tax competitiveness.
“The federal Budget provides the platform for these immediate issues to be addressed and to set out a strategic plan for tax reform which avoids the usual practice of playing catch-up when we fall behind.
“It is important to note the report represents a snapshot of where Australia stands now.
“Given the fast rate of change in tax rates and structures among Australia’s competitors, what is uncompetitive now will become – without reform action – even more uncompetitive in a short space of time.
“Similarly, what appears competitive now can quickly fall behind, without constant review and change.”
“This is why the BCA, in its recent Keeping a Permanent Watch on Australia’s Tax System paper, called for a major review of tax competitiveness at least every two years to make sure this key part of the economy remains globally competitive.”