Tax cut broken promise hits jobs and growth

The Federal Government should keep its promise of a 1.5% tax cut to all businesses – large and small – the Australian Chamber of Commerce and Industry (ACCI) said, after the Government indicated that Australia will move to a two-tier company tax system.

All Australian businesses had been promised a reduction in the company tax rate from 30% to 28.5% from 1 July 2015, however comments in the media by a senior minister indicate that the tax cut will no longer be received by businesses with a profit of greater than $5 million a year, the ACCI said.

Kate Carnell AO, the CEO of the ACCI, said: “With the scrapping of the paid parental leave scheme, it makes sense to scrap the company tax levy that was due to fund it. By pocketing the money – and making no promises that the funds will be directed to childcare initiatives – the Federal Government is dealing a major blow to Australia’s biggest employers.

“The Government needs to deliver on its promise of a 1.5% company tax for all Australian businesses. Business confidence is already fragile, and this decision will damage the capacity for businesses to invest in their futures and hire new staff.”

The company tax system that the Government is seeking to introduce by stealth will create incentives for companies to stay below the profit threshold for the higher tax rate, stifling the entrepreneurs and innovators the Australian economy needs to realise its full potential, the ACCI said.

If the Government intends to introduce this significant change to the company tax system, it should be considered by the White Paper on the Reform of Australia’s Tax System currently being prepared by Treasury, the ACCI added.

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