21 December 2017

Shorten puts Aussie jobs and wages at risk as United States slashes company tax

Bill Shorten’s continued reckless opposition to a competitive Australian company tax rate would take one per cent from Australia’s GDP in the wake of United States actions overnight to slash its corporate tax rate from 35 to 21 per cent.

IMF research confirms the United States tax cut will send Australian jobs and higher wages offshore, constituting a body slam to our economy and Australian workers if we are not able to reduce our company tax rate as planned in order to maintain our international competitiveness.

The Turnbull Government’s fully costed and responsible Enterprise Tax Plan would enable us to avoid the IMF scenario through a reduction in our corporate tax rate for all companies to 25 per cent over 10 years.

Although we have already successfully legislated a lower company tax rate for businesses with turnovers of up to $50 million, only full implementation of our plan would help offset the damaging effects that the IMF has identified.

Make no mistake, Bill Shorten and the Labor party are choosing to export investment and jobs, as well as undermine our tax base as companies look to do their business elsewhere.

Shadow Treasurer Chris Bowen once said “it would be a better thing if Australia’s corporate tax rate was more competitive”. We agree.

Treasury modelling released with the 2016-17 Budget estimated our tax cut would increase the size of our economy by around one per cent.  That’s more, and permanent, economic growth and jobs as well as higher wages as a result of more investment.

Unfortunately such proven links between corporate tax cuts and higher investment are being deliberately ignored by the Labor party.

The Turnbull Government is delivering on the economic growth and jobs we promised at the last election. We are already acting to help generate 1,000 jobs a day in 2017, a record year for jobs growth. Our economy is currently growing at 2.8 per cent, at the upper end of our international competitors, spurred on by our legislated small and medium sized business tax cuts, defence industry plan, $75b infrastructure investment and responsible actions to bring the budget back to balance.

The Trump tax cuts are coming. If we fail to respond, they will take Australian jobs, investment and wages with them.

The Turnbull Government makes no apologies for continuing to advocate and implement policies for a growing Australian economy, more Australian jobs and higher wages.

Shadow Treasurer Chris Bowen on the necessity of a competitive Australian company tax rate

As Shadow Treasurer – AFR Tax Reform Summit – 22 September 2015

  • “I would like to see the corporate tax rate come down over time. I have previously said the nation should be aiming for a 25 per cent corporate tax rate.”
  • Clearly you can have over time a move towards a more competitive system in corporate tax. It'll take time and it'll take tough decisions.”

As Shadow Treasurer - ABC Lateline – 4 December 2014

  • As the alternative Treasurer, I’m telling you that I think it would be a better thing if Australia’s corporate tax rate was more competitive. I’d like to see it lower over time. I think we’ve had 14 years of having the corporate tax rate stable. That’s too long. Over time, I’d like to see it lowered.”

‘Hearts and Minds’ (July 2013) – chapter on ‘Promoting Growth Through Cutting Company Tax’

  • We do, however, need to be concerned if our corporate tax rate is on the higher side of the highest side of the world’s advanced economies. At 30 per cent, our company tax rate is now above the OECD average…. It is how the rate compares to that of our competitors that counts. [Page 64]
  • ‘Keating knew that the corporate tax rate needed to be cut to make Australia competitive, that capital and investment would flow to tax-competitive nations and that this was an important job-creation move. Today capital is even more mobile than it was then and it is important that our corporate tax rate is more competitive.’ [Page 64]
  • The 30 per cent rate was reasonably competitive when it was first introduced, but since then other countries have reduced their rates so that the average across the world’s advanced economies is now 24 per cent. Canada’s company tax rate is 15 per cent (when provincial rates are taken into account its company tax rate is still below Australia’s.’ [Page 65]

As Shadow Treasurer - ABC 7:30– 11 July 2013

  • “I think we should have the ambition of lowering company tax … it would be the approach that we would take that our ambition would be lower company tax rates over time because it does improve our international competitiveness.”

Attachment: OECD corporate tax rates [PDF 204KB]