MCA calls for tax reform, says ‘excessive’ burden is hurting investments
PERTH (miningweekly.com) – A new report by the Minerals Council of Australia (MCA) has warned that Australia’s continued lack of tax reforms will make it much harder for the country to compete for investment, as other countries continue to cut tax rates.
The report, by the MCA’s international tax expert Dr Jack Mintz, notes that Australia’s tax competitiveness for investment continues to decline, with the country in 2019 slipping from having the equal fifth-highest headline company income tax rate across the Organisation for Economic Development (OECD) countries, to having the second highest, only behind Portugal.
Australia’s 30% headline company tax rate is also higher than the weighted average of the Group of Seven, the Group of Twenty and OECD countries.
The report measured marginal effective tax rates around the world, including tax depreciation regimes, stamp duties and other taxes.
Based on these calculations, Mintz found that Australia’s marginal rate is 28.4%, the third-highest burden on new capital investment in the developed world.
The report recommends a modest rate cut to 25% will help restore Australia’s competitiveness by reducing the effective tax rate on new investment in Australia to 24.3%.
“Australia has not embarked on a significant company tax reform since the early 2000s. It cannot afford to remain idle for much longer. The goal for Australia should be to reduce company tax to an internationally competitive rate across the board and maintain Australia’s largely neutral system as far as possible, so as not to favour any particular business activity,” Mintz said.
MCA CEO Tania Constable said on Monday that based on Mintz’s research, the industry body would continue to advocate for future company tax reform in Australia as part of broad tax reform, including further personal and small business tax cuts, that complement changes already legislated by the federal Parliament.
“As a medium-sized capital importer, an excessively high tax burden on Australian business and investments will handicap our future economic growth, including in regional communities sustained by our world-leading minerals industry,” Constable said.
“A more competitive company tax rate is critical in helping Australia compete for investment and boost innovation, productivity and wage growth.
“The overwhelming consensus among economists, Treasury and international economic agencies is that a lower company tax rate will benefit workers by boosting economic growth, wages and jobs.”
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