Australia's Government should pursue a 25 percent corporate income tax rate, to replace the nation's uncompetitive 30 percent rate, the Chief Executive of the Australian Industry Group (Ai Group) has said.
Innes Willox was responding to Prime Minister Tony Abbott's announcement that the Government will not be implementing the 1.5 percent company tax cut provided for in the 2014 Budget. Willox described the decision as "a major disappointment for Australian business and a setback to growth."
"Reducing the rate would lift investment, lift productivity by accelerating the renewal of the capital stock, and add to job creation. A longer-term ambition of a 25 percent corporate tax rate should be pursued as a key measure to allow Australia to be internationally competitive," he said.
Willox added that, in the absence of a rate cut, the Government should introduce a faster write-off for capital expenditure for tax purposes, for all companies. Ai Group has also proposed that the small business instant asset write-off regime, scrapped by the Coalition, should be restored. This would mean that businesses with turnover of less than AUD2m (USD1.56m) would be able to claim up to AUD6,000 of capital expenditure in the year an investment is made.
Abbott confirmed this week that the 2015 Budget, due in May, "will have measures to cut small businesses' tax bills in ways that will stimulate investment, boost productivity, generate new jobs, and make existing jobs more secure." He said that the "small business tax cut will be more than paid for by not proceeding with the parental leave scheme that's already been taken off the table." The Government will not go ahead with an accompanying Paid Parental Leave (PPL) levy either.
According to Willox, the PPL levy "would have imposed a heavy additional impost on business and would have added significantly to compliance costs for larger businesses."
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