A Treasury research paper examining the global implications of US plans to reduce company taxes highlights the real risks to Australian economic growth and wages should our company tax rate remain less internationally competitive and highlights a revenue return to the Budget under the Turnbull Government’s Enterprise Tax Plan.
The paper raises serious concerns that should the US implement the Trump company tax cut, investment in Australia will potentially fall, leading to flow on effects including lower wages for hard-working Australians and lower economic growth.
The Treasury paper reiterates the permanent 1 per cent economic growth dividend of the Turnbull Government’s business tax cut. It also notes that revenue lost from the tax cut will be recovered in the long run through increased economic growth.
Treasury estimate the revenue return of the Enterprise Tax Plan to be about 45 cents per dollar of net company tax, with 8 cents accruing to State and Territory governments and 37 cents to the Commonwealth.
In highlighting the risk to Australia’s international tax competitiveness, the report finds that other countries would likely respond to any US company tax reduction to avoid negative effects. Competition between jurisdictions could accelerate.
A permanent reduction in GDP and real wages might become a reality unless steps are taken to maintain Australia’s competitiveness.
This is why the Turnbull Government’s fully-funded Enterprise Tax Plan currently before the Parliament, will act to ensure Australia remains an attractive destination for investment. More investment means higher economic growth and more and better paid jobs.
Clearly Australia risks being left behind. It is as simple and stark as being potentially marooned on our own tax island. The Turnbull Government gets this. That’s why we are moving to shore up our competitiveness on investment through our fully-funded Enterprise Tax Plan, which has already delivered lower taxes for businesses with turnovers of up to $50 million.
The Labor party understand this as well but have adopted a wrecking approach to economic policy that will strand our country, sacrificing higher wages, investment and economic growth to Bill Shorten’s political ambition.
It’s past time they supported what they know will be good for our economy and good for Australian workers.