Findings

Findings of the Business Tax Working Group

Finding 1:

The Working Group believes there could be economic benefits associated with a cut in the company tax rate. A reduced rate would lead to greater investment in Australia in the longer term, which would contribute to improved productivity and higher wages for Australians.

Finding 2:

The Working Group considers that a cut in the company tax rate of two to three percentage points would be needed to drive a significant investment response.

Finding 3:

The Working Group has found that the business tax base is broader than it was in the 1980s and 1990s and significant savings are now more difficult to identify and reach consensus on.

Finding 4:

The Working Group notes that there is considerable debate and uncertainty around the magnitude of the distortion associated with the remaining concessions in the business tax base, including concessions that promote important activity like investment in infrastructure and research and development.

Finding 5:

The Working Group received feedback from many individual businesses asserting that they would be worse off as a result of the trade-offs canvassed in the Discussion Paper. Further, some submissions questioned whether there would be a net benefit for the economy as a whole from a combination of some of the base broadening measures canvassed and a cut in the company tax rate of between one and three percentage points. Overall, the Working Group has found there is a lack of agreement in the business community to make such a trade-off.

Finding 6:

The Working Group considers that Australia should have an ambition to reduce its company tax rate as economic and fiscal circumstances permit. This would need to be considered against other budget priorities and should take into account the overall mix of business taxation.

Finding 7:

The Working Group commends the principles for business tax reform it has identified as a useful framework that articulates the range of relevant considerations. The Working Group also supports the continuation of a consultative approach to business tax reform.

Finding 8:

The Working Group considers that an ACE should not be pursued in the short to medium term but may be worthy of further consideration and public debate in the longer term.