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The Forum > Article Comments > The case for company tax cuts > Comments

The case for company tax cuts : Comments

By Michael Potter, published 19/5/2016

If company tax cuts can be criticised on the basis that they mean other taxes will increase, then surely the same criticism can be made about Gonski.

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The case for company tax cut might make sense if around 95 % of corporate Australia hadn't offshored their operations.(John Howard and his take on tax reform, at the time he introduced his GST)

This feature and the double tax act of 1953 could simply mean we'd just be transferring scarce tax dollars to foreign Tax Offices. We'd be much worse of with comparatively less revenue And the companies wouldn't get any real tax relief.

If it was only applicable to Australian companies still headquartered here, it might make some sense as would outlawing other regressive taxes, like payroll tax and the ubiquitous and cascading GST?

Everybody know we need tax relief and or tax reform and watch in wonder as squirming officialdom adroitly avoids doing anything real about either!?

I've read various economists who seem to agree we could raise as much revenue via a transaction tax of just 2,5%?

But that's is as always just dismissed by the tax experts it would render redundant! Ditto a stand alone unavoidable 5% expenditure tax which would raise more revenue and rejected for the same self serving reasons!?

Other just reject out of hand any such idea, and without trial; and reminiscent of flat earthers who knew the world was as flat as a pancake! Muttering regressive, how could such a small figure raise enough money? Even if applied to all expenditure, inclusive of all bank transfers and overseas remittances!

Which would really put the cat amongst the pigeons with the avoidance industry! And given who benefits bound to be rejected on a veritable plethora of spurious excuses for rejection or more inaction!
Alan B.

Well without overstating the blindingly obvious, you'll never ever know if you never ever try!
Posted by Alan B., Thursday, 19 May 2016 11:01:27 AM
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The case for company tax cuts is clear, Australia with one of the highest company tax rates in the world needs people to invest, and given the high cost of doing business, investments go where the returns are.

The estimated returns for a $1 tax cut are $4 in local business with the commensurate tax revenue.
Posted by Shadow Minister, Thursday, 19 May 2016 1:43:58 PM
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The case for company tax cuts is very weak. Our dividend imputation system means that most of the benefits would flow to foreign owners.

There would of course be a benefit to Australia: it would encourage investment in Australia. However it's an extremely expensive way of achieving that benefit. The government can achieve similar (and sometimes better) results at a far lower cost by:

Investing in better infrastructure
Investing in better education
Investing in science
Keeping interest rates low
Stimulus spending when needed to maintain domestic demand.
Posted by Aidan, Thursday, 19 May 2016 2:15:10 PM
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Numerically, the vast majority of businesses in Australia are small businesses.

And the vast majority of small businesses are not incorporated.

Thus, they derive no benefit at all from company tax cuts.

The best way to assist small businesses to grow and prosper would be to reduce the crushing burden of compliance costs - particularly in terms of the soul destroying form filling and reporting for reporting's sake, just because some public servant thinks it would be nice to have a lot more information, even if nothing productive is ever done with it.
Posted by calwest, Thursday, 19 May 2016 2:50:13 PM
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Aidan,

What a lot of twaddle.

Firstly most businesses that benefit from the tax cut are the 400 000 small businesses who are not sending dividends overseas,

Secondly even the large corporates do not send most of their dividends overseas, and what they do send is largely balanced by Aus companies based overseas repatriating dividends.

Finally, even if an investor owned a company 100% and repatriated the dividends, people would be employed and pay tax.
Posted by Shadow Minister, Thursday, 19 May 2016 2:51:16 PM
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So Aidan's solution is:
SPEND on infrastructure;
SPEND on education, despite the correlation between increased spend and reduced educational achievement;
SPEND on stimulus projects - like the pink batts program, for example;
and keep interest rates low, so that self-funded retirees can never be quite sure whether they'll outlive their money.

Aidan, the problem is we've done way too much spending since KRudd appeared on the scene. Weasel words like "invest" don't fool anyone any more.

Better to reduce spending and reduce taxing, so that businesses, particularly small businesses which employ most of the workforce, can grow and employ more people.
Posted by calwest, Thursday, 19 May 2016 2:59:30 PM
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