Aust Business – Boost GST To Get Business Tax Cuts
July 10th, 2009
The Business Council of Australia wants the company tax rate to be halved, with GST lifted from 10% to cover the revenue shortfall. The Council also wants tax on capital gains and interest income to be slashed to 15%, saying the reforms would attract international investment and raise economic growth. Both Wayne Swan and Treasury Department head Ken Henry say the Govt’s tax review… will consider lowering company tax rates but the Govt has vetoed any change to GST. But the BCA says tax reforms cannot be achieved unless the Govt increases GST and extends it to exempt areas such as food and educational books. The BCA’s submission to the Govt’s tax review cites US-based research showing a 10 percentage point cut in the company tax rate would lift the country’s annual economic growth per capita by 1.8%.
The BCA also quotes estimates by Canada’s Finance Department showing lowering company tax would lead to higher investment and GDP. Although Aust’s flat 30% company tax rate was relatively low when it was set in 2000, but there are now 21 countries with a lower corporate rate. The BCA quotes a World Bank report ranking Aust 48th out of 60 nations in terms of its tax burden on business.
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