Liberal leader and Cabinet Secretary Arthur Sinodinos has urged a cut in corporate tax suggesting that it would benefit Australia as more money in the hands of workers and consumers would bode well for the economy.
“Putting money into the hands of consumers obviously encourages more spending and disposable income and has good incentive effects. But cutting company taxes also has good effects,”
Sinodinos asserted that it would bring more investment and enhance productivity. “There are lots of studies that show it ultimately leads to higher GDP in the economy and higher wages for workers.” He also criticised the Labor party for its stand against bringing down company tax.
“It’s not like ’99 or 2000 where we had a major budget surplus, which allowed us to turbo-charge income tax cuts as we were making a major tax mix switch,” Sinodinos said.
Meanwhile, Labor urged the coalition to reveal its plans for company tax following Sinodinos’s comments, which talked about “reducing the burden on business,” reports The ABC.
The pitch for cutting company tax comes from the ruling circles after the government showed signs of reneging from its earlier plan of cutting personal income tax in the May budget.
At present, corporate tax for companies with an annual turnover of $2 million and more is 30 percent. However, small businesses managed to get a tax cut in 2015 and their tax rate reduced to 28.5 percent.
Shadow assistant treasurer Andrew Leigh said the Sinodinos’ proposal was another thought bubble on tax floated by the coalition.
“This Government could open a bubble factory to amuse young children,” Leigh quipped. He urged the Liberals to spell out how it is going to provide economic leadership and also explain the failure in delivering it.
In the past, Treasurer Scott Morrison has been saying how “passionate” he was on addressing bracket creep. However, on March 18, he said that before the government can provide income tax relief, it is required to have a budget surplus and strong growth rates or new taxes.
Chief executive Jennifer Westacott argued that Australia’s global competitiveness ranking is down from 10, a decade ago, to 21st today, and is lagging behind New Zealand.
“Our 30 percent company tax rate is uncompetitive, and it’s likely to become more so as other countries continue to lower their rates,” she recently told the Australian Financial Review Business Summit.
The Business Council in a discussion paper in February had called for cuts in personal and company tax rates and wanted the company tax rate to be cut from 30 percent to 28.5 percent with a further cut to 25 percent in the next five years.