6 September 2012
Call for company tax cuts to spur reform
The Australian
Respected business leader Dick Warburton says a corporate tax cut should be the first step of a renewed campaign of tax reform to make Australia more competitive and help lift the nation's flagging productivity.
Federal Labor shelved a promised plan in this year's budget to reduce the 30 per cent headline rate to 29 per cent in a bid to save $5 billion over the next four years.
The government has consistently ignored the Ken Henry report, which proposed the rate be cut to 25 per cent to ensure Australia remained competitive with its major trading partners.
Mr Warburton told GE Capital and The Australian's Capital Gains series forum in Sydney yesterday that a rate cut should be the start of a wholesale reform of the tax system.
The forum discussion panel included leading business executives Skander Malcolm, the president of GE Capital in Australia and New Zealand, and Boost Juice founder and chief executive Janine Allis.
Mr Warburton, who is also the chairman of Manufacturing Australia, was part of a taskforce appointed by former treasurer Peter Costello to review the tax system against its major rivals in 2006.
"A lower tax rate would save businesses money but there is also the opportunity to offset it by getting rid of some of the inefficient taxes like the land taxes, the insurances taxes, some of the state government taxes," Mr Warburton told The Australian.
"Six years ago, 30 per cent was reasonably competitive - it wasn't too high, it wasn't too low, but in five years things have changed quite a lot.
"Other countries have come down and that makes us uncompetitive. We are an outlier now, we weren't six years ago."
He said he believed the Coalition would have the political fortitude to cut the company tax rate if it won the next election.
Opposition Treasury spokesman Joe Hockey said in April that a Coalition government would deliver a "modest" company tax cut funded by budget savings.
The budget is forecast to reach a $1.5 billion surplus by the end of the current financial year.
"I don't think this government is going to do it, but I think the other government (the opposition) will do it," he said.
Mr Warburton said Labor should also consider raising the GST, which would allow a range of smaller taxes to be scrapped.
"We really should be increasing the GST - at 10 per cent we are the lowest of the OECD countries," he said. "We could go to 12 or 15 per cent and get rid of a lot of inefficient taxes.
"But governments won't do it...it's political dynamite, (but) I will continue to push the politicians and say 'Please, please do something about it'."
Transport Minister Anthony Albanese told the forum Labor had been blocked from delivering the tax cut because of the hung parliament. "I mean, it's a practical reality. We had a proposition that couldn't get through the Senate," Mr Albanese said.
The forum was also told the government was keen for superannuation funds to become a diversified source of funding for infrastructure development.
Mr Albanese said Labor had offered loss-clawback provisions to the funds, which were hesitant to become infrastructure investors. "It certainly has not gone as far as I would like it to have gone," Mr Albanese said.
"There is certainly a reluctance of investment, particularly in greenfill infrastructure. I think there is far greater enthusiasm for brownfield sites, so in terms of the concept of recycling capital, I think it is one that is certainly worth looking at."