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Australian business associations are calling for lawmakers to support the Government's 10-year corporate income tax cut plan.
The House of Representatives is expected to vote on the Enterprise Tax Plan Bill, the Government's 10-year plan for phased reductions to the company tax rate, on February 14. The first phase, a cut to the small business company tax rate from 28.5 percent to 27.5 percent and a three percent increase to the unincorporated tax discount, had originally been earmarked for July 2016. As part of phase two, the Government intends to extend increase the turnover threshold for the 27.5 percent rate each year until 2023-24, before reducing the rate to 25 percent for all businesses in 2026-27.
The Australian Chamber of Commerce and Industry (ACCI) says that adopting the plan would not hit the nation's budget. It noted that in 1988 the Government reduced the company tax rate from 49 percent to 39 percent. ACCI said that company tax revenue rose from AUD8.6bn (USD6.6bn) in 1987-88 to AUD12.7bn in 1989-90, while company tax as a share of revenue increased from 11.4 percent to 13.9 percent. It pointed out revenues also rose when the rate was cut to 33 percent in 1993, and also between 2000 and 2001 after the rate was cut to 30 percent.
ACCI CEO James Pearson said: "This analysis demonstrates that Australia can improve its international competitiveness, without putting the budget at risk, by cutting the tax rate, as we have in the past with great success under Labor and coalition governments."
Meanwhile, National Farmers Federation (NFF) Chief Executive Tony Mahar and Business Council of Australia (BCA) Chief Executive Jennifer Westacott said in a joint statement: "With business tax rates falling around the world, Australia must reduce its uncompetitive 30 percent tax rate for all companies to encourage the new investment that is desperately needed to scale-up our agribusiness sector over the coming decades."
"This is a critical time. Australian agribusiness has huge potential to supply fast growing Asian markets but fulfilling this potential will require large new investment at all stages along the supply chain, from family farms to large processors and exporters."
They warned that limiting the tax cuts to small businesses would hamper investment in the processing of agricultural goods and limit the potential to add value to Australia's agricultural exports.
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