Australian Cut Corporate Tax, If GST is Hiked
January 19, 2016 Taxation in Australia
CANBERRA – New research points has highlighted the potential benefits of cutting corporate tax in Australia, but it has also detailed the extra GST costs which need to be paid by everyday taxpayers.
On January 18th the Financial Service Council of Australia published the results of new research which indicated that the government should drastically cut the rate of corporate income tax to 22 percent from the current level of 30 percent.
It is estimated that implementing such a significant cut will help boost the national GDP by 1.9 percent, increase labor productivity and real wages by 1.8 percent and 1.4 percent respectively, while employment and investment levels would rise by 0.1 percent and 3.7 percent.
Further it was claimed that the reduction in the tax rate would reduce the government reliance on corporate income tax, a source of income which can be prone to volatility, while also discouraging large multinational businesses from attempting to shift their profits away from Australia and into low-tax jurisdictions.
However, in order to pay for the tax cut for businesses, the government would need to increase the rate of GST from 10 percent to 15 percent.
The GST would also need to be expanded to include basic foods, healthcare products and services, and education, all of which are currently exempt.
Photo By: Martin Howard