Tax Cuts Proposed in Australia
August 14, 2012 Taxation in Australia
CANBERRA – Australia is investigating the feasibility of cutting corporate taxes and dropping several tax allowances for businesses.
Discussions on tax reform heated up in Australia after the Business Tax Working Group, a research group appointed by the Treasury of Australia, released a consultation paper on August 13th suggesting that the government should cut the corporate tax rate from 30 percent to 25 percent and remove a number of tax concessions currently available to businesses.
The tax cut would reduce national tax revenues by approximately AUD 26 billion over the next four years. The Working Group said that the lowered revenues could be offset by cutting tax concessions, which currently cost the government approximately AUD 11 billion per year.
According to the Working Group nearly AUD 5 billion of revenue savings could be made by changing the tax rules for resource extraction operators, and an additional AUD 2.25 billion could be saved by abolishing the tax credits granted for research and development activities.
The proposal to cut tax concession has been decried in the Australian business community, with strong opposition arising to the proposal of removing the research and development credits. Mine operators have also criticized the changes, saying that the tax cuts would benefit companies in all industries at the expense of business involved in resource extraction.
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