We need tax reform
The Australian Government appears to have shelved the tax cuts to big business because it believes there are no votes in a policy that the electorate perceives as just benefiting big business.
Nevertheless, discussions about a five-percentage point reduction in the statutory corporate income tax rate are like a passionate debate about the parsley garnish on your mashed potatoes: they miss the point. Marginal changes detract from discussions about reform of the broader tax system. Corporate income tax reform should be part of the discussion, but not the focus.
Globally, corporate income tax rates have consistently declined since the 1980s. Across Organisation for Economic Co-operation and Development (OECD) countries, Australia’s current corporate statutory income tax rate is only exceeded by Portugal and France and its proposed rate of 25 per cent is still higher than about half of countries.
So if most other developed countries already have corporate income tax rates lower than Australia’s, shouldn’t it reduce its rates too?