“There’s no doubt that a company tax reduction of this magnitude would profoundly change the arithmetic for global investors when they decide where to put their money,” Business Council chief executive Jennifer Westacott said after the Trump Administration’s announced plans to cut the US company tax rate from 35 to 15 per cent.
“This tax cut is a massive threat to the incomes of Australian workers. It will suck billions of investment dollars away from countries like Australia and funnel it back to America.
“New business investment in Australia as a share of GDP is at its lowest level since December 1995, with serious consequences for income growth in this country.
“Doing nothing is not an option. Donald Trump has repeatedly made clear that his economic strategy is about aggressively protecting American companies, American workers and American jobs. It would be irresponsible to ignore that or pretend there’s no need to act.
“We commend Treasurer Morrison for his commitment today to re-introduce the remainder of the Enterprise Tax Plan to parliament when it returns for the budget session.
“It’s imperative that the parliament passes the Enterprise Tax Plan in its entirety to restore Australia’s company tax rate to the middle of the pack and protect and grow jobs in this country.
“Australia’s 30 per cent company tax rate is already a global outlier. It is the fifth-highest company tax rate among 35 OECD economies, well above the OECD average of 24 per cent.
“Even Emmanuel Macron, who is considered the front-runner to become the next French president, would reduce France’s company tax rate to 25 per cent.
“The higher-end estimates are that Trump’s tax plan could lift US investment by more than 20 per cent, or $US400 billion. Even if the investment uplift were only 5 per cent, this represents about $US100bn of extra investment, most of which will be drawn from global capital markets on which Australia relies.
“Every time company taxes are reduced overseas, it’s an effective tax increase on Australians. A poll this week showed only 20 per cent of Australians prefer tax hikes to spending reductions to balance the budget,” Ms Westacott said.