It is no longer credible for Parliament to leave Australia’s top company tax rate frozen in time and one of the highest in the world as other nations move dramatically to increase their global competitiveness says Business Council of Australia chief executive Jennifer Westacott.
“The decision by the United States to slash its federal company tax rate from 35 to 21 per cent underlines the urgency for Australia to boost competitiveness to continue to attract new jobs and investment and power a growing economy.
“This is a critical moment for our political leaders.
“The US understands how crucial to their economy it is to have a competitive company tax rate. Why don’t we?
“US moves, along with other nations’ commitments, will leave Australia with the 2nd highest company tax rate in the OECD.
“The Keating and Howard governments each dropped Australia’s company tax rate below the OECD average at the time. Today it stands well above the 24 per cent OECD average – and that average will fall.
“The battle for global investment dollars is fierce, and we are losing out.
“This is not a tax cut for millionaires, this is a tax cut that will benefit the millions of workers employed by Australian companies.
“Australia’s 30 per cent rate was set 16 years ago but is now woefully uncompetitive against the United States at 21 per cent, the United Kingdom’s move towards 17 per cent and France aiming for 25 per cent. The average in Asia is 21 per cent.
“The US is making a 14 percentage point cut to its rate immediately while Australia’s proposed, modest 5 percentage point reduction would take 10 years to be fully phased in.
“The Australian Treasury recently warned the US tax reforms have the potential to make Australia’s current corporate tax rate ‘increasingly uncompetitive internationally’.
“If we are serious about protecting Australian jobs and living standards, we must take action to protect our international competitiveness. Australia needs a thriving private sector fuelled by investment – innovating, growing, creating jobs and opportunity.
“Five out of every six working Australians are employed by the private sector – slow investment in Australian businesses will hurt not just those workers but their families and the communities that rely on them.
“The United States, France, Belgium and the United Kingdom are acting to protect their workers and boost their economic growth by ensuring they remain competitive – Australia must do the same.”
What Australia’s job creators say
“If Australia's company tax rate remains so much higher than others in the world, we can expect to see more investment move offshore.” – Alan Joyce, CEO, Qantas
“For a capital-dependent, medium-sized economy like Australia, falling off the pack on tax greatly impacts investment and growth. In a sector like mining, if you miss an investment window, aligned to growth cycles in Asia for example, you miss it. Scarce capital gets allocated. Once allocated, it doesn't come back.” – Joanne Farrell, Managing Director Australia, Rio Tinto
“Under a 25% tax rate MYOB would be able to invest an additional $5 million in our business. In effect this would mean hiring 40 - 50 more software developers in Australia, to help local small businesses streamline their operations. MYOB competes with software companies that are based in other jurisdictions, including the USA. As their tax rates are lowered we will be at a competitive disadvantage if Australia does not act to lower company tax rates.” – Tim Reed, CEO, MYOB
“There's no doubt a lower company tax rate makes Australia a more attractive place to invest capital and create jobs. The reality is that Australia's business tax rates are high compared to OECD averages.” – Alison Watkins, Managing Director, Coca-Cola Amatil
“As the US joins other nations with a significantly lower tax rate, it is vital that we follow so that we continue to encourage the investment we need to underwrite the prosperity of future generations of Australians.” – Malcolm Bromhead, Chair, Orica
The more competitive the company tax rate, the more likely it is big capital investments will be made in Australia.” - Catherine Tanna, Managing Director, EnergyAustralia