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The Forum > Article Comments > 'Benefits to foreigners' are just one problem with Australia's muddled debate on company tax > Comments

'Benefits to foreigners' are just one problem with Australia's muddled debate on company tax : Comments

By Michael Potter, published 12/8/2016

The absurd argument was that Australia should forego an increase in wages, investment, incomes, employment and economic growth just because some foreigners might receive a benefit.

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Public suspicion with foreign investment, is largely a result of lack of confidence and trust in those implementing favourable policies towards foreign investors and foreign companies.
In the end, politicians need only please themselves to implement any policy change. Public opinion will be disregarded; where is the evidence it is not?
Posted by diver dan, Friday, 12 August 2016 8:30:27 AM
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The opportunity cost of a company tax cut is enormous. As the treasury document linked to indicates, company tax cuts are not self funding; they have to be funded by an increase in some other tax (or a cut in government spending).

But the treasury document is likely to severely overestimate the benefits of a company tax cut, as it ignores the amount of domestic capital formation. Its statement that "Foreign investment is more efficient because domestic households do not have to sacrifice current consumption to fund the investment" is a laughable consequence of their erroneous assumptions about household savings rates and business debt to equity ratios being fixed. Notably the effects of interest rate changes on business investment are not even mentioned once!

There are plenty of far cheaper ways to boost our economy, and indeed to boost business investment. A company tax cut shouldn't even be considered until those have been implemented.

And if we really want tax reform to make us more competitive, we should abolish the GST. Doing so would boost our standard of living while cutting red tape.
Posted by Aidan, Friday, 12 August 2016 11:52:36 AM
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Right on the money Diver!

Simply put, hardly any corporation pays their fair share of tax now, without us lowering the rate, that one, increases the revenue paid to other administrations or in a lose lose outcome that two, further erodes the already damaged revenue base. Revenue which will three, have to be made up by already overloaded average mug taxpayers!

Even so, there is a case for real reform, just not the proffered prefered asinine absurdity! And that reform is a flat unavoidable 15% collected via the banking fraternity as money exists accounts that everyone earning pays, even pensioners!

And where the massively increased revenue base, will allow pensions to be literally doubled to offset or compensate!?

This paradigm will after quite massively increasing the revenue base, eliminate unproductive parasitic practise and most of the 5000 strong ATO? Which together is, I'll warrant, the reason for this obdurate obtuse obfuscation!?

This, as proposed, real reform, will include the 95% of corporate Australia, who've offshored their operations to avoid tax! Which as compensation, could include forgone fuel tax and the endless cascading regressive GST

It will incLude those multinational guests 40% of whom pay no company tax to anyone and the others who average between 1-4% tops!

And that number includes corporations whose annual budget, is larger than many sovereign nations.

The only problem with this debate, is in the diabolically disingenuous nature of it and folk (smiling clever people) who are simply trying to protect a patch or personal income stream?

Where the rest can just go visit the nearest taxidermist!
Alan B.
Posted by Alan B., Friday, 12 August 2016 12:25:14 PM
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