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Big Business wimps tax reform « Previous | |Next »
October 25, 2012

The Business Tax Working Group has issued its draft final report on company tax reform. Its brief was to figure out a way to lower company tax rates in Australia, by reducing the special tax breaks and other loopholes. The fundamental core of the Working Group's brief was revenue neutrality.

The Working Group argued that reducing the company tax rate (from 30 to 27per cent) could deliver net benefits to the economy:

A reduced rate would result in greater foreign investment flows into Australia by increasing the after‐tax return on investment. Greater investment would enhance the capital to labour ratio, a process known as ‘capital deepening’, which could increase the marginal product of labour, resulting not only in higher economic growth but also higher wages in the long term.

However, the Working Group's report states that it is unable to recommend a revenue neutral package to lower the company tax rate. It has rejected ejecting the possibility of finding the revenue for reducing the overall company tax rate by getting rid of special industry perks and exemptions in the areas of tax deductibility of business debt, capital depreciation write-offs, and research and development tax refunds.

The inference is that Big Business wants lower company tax rates (to 27 per cent ) and their own special tax breaks as well. We can further infer that lower company tax rates should be financed by higher taxes for workers and consumers, or by more government borrowing, or by cuts to government services for everyone. Big Business' preference, stated in the past, is for broadening the GST and cutting heavily into the welfare state.

So Big Business stands exposed in terms of tax reform. They are only interested in protecting their own interests not tax reform. This of course, would not surprise anyone familiar with the Business Council of Australia.

| Posted by Gary Sauer-Thompson at 1:37 PM | | Comments (2)
Comments

Comments

They never want to lead by example, do they?

"The inference is that Big Business wants lower company tax rates (to 27 per cent ) and their own special tax breaks as well. "

Business is pushing for a big budget surplus so that the government can compensate the corporate losers from the essential tax reform of reducing the company tax rate.

With declining government revenue there is need for a a tax is to filling up the kitty. Hey, there's the GST --it can be broadened to cover food and the rate increased.