Australian businesses are at risk of being left further behind in the global competition stakes as the US proposes a radical attack on business taxes and red tape.
Reports from the US suggest President Trump is pushing for an aggressive agenda of tax reform, including a reduction of the corporate tax rate to 20 per cent and abandoning the taxation of overseas profits.
The US already ranks second in the world in the World Economic Forum’s Global Competitiveness Index – while Australia sits back in 21st place – and such a move, if implemented, would push it further ahead of already struggling Aussie firms.
“Around the world, governments are reducing their business tax rates to better compete for investment and create jobs,” said James Pearson, chief executive of the Australian Chamber of Commerce and Industry.
“Other countries are moving faster and further in reducing their tax rates and if we stand still, we will be left behind.”
Mr Pearson has added that Treasury’s own modelling shows more than 60 per cent of the benefit of business tax cuts ultimately go to households, which in turn go on to boost the wider economy.
“History has shown that, in Australia, when the business environment is improved and company tax rates reduced, company tax receipts have bounced back in just a few years as companies have greater earnings on which to pay tax. That’s happened after business tax cuts made by Coalition and Labor governments,” he said.
“Already, the slight uptick in the economy has seen the government collect over half a billion dollars more company tax receipts than predicted in the last financial year.”