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With the Federal Parliament, today securing personal income tax cuts is it now time for Parliament to do the same for company and business tax cuts. Let's rally Business Australia and share your thoughts?

3 months ago

Responses

Corporate taxes should be minimised as a priority, to help business underpin the economy through more employment.

I'm not so sure. The jury is still out in my opinion. While it may stimulate some sectors of the economy including the big banks and create more jobs, it may decrease overall tax revenue. If it does, where will the savings be made to accomodate this? Or will the deficit just increase? US commentators are undecided.

https://themarketmogul.com/trumps-tax-cuts-working/
http://cepr.net/publications/op-eds-columns/are-the-trump-tax-cuts-working-and-does-anyone-care
https://www.washingtonpost.com/news/politics/wp/2018/04/20/the-tax-cuts-are-working-for-banks/?utm_term=.764108cc3743
http://www.abc.net.au/news/2018-05-08/donald-trump-corporate-tax-cuts-australia-malcolm-turnbull/9733854

https://taxfoundation.org/corporate-income-tax-rates-around-world-2016/

I found this a very interesting article. I noted that the countries with the LOWEST corporate tax rates are not necessarily somewhere I would want to live. Because taxes pay for a whole heap of really cool things that we probably take for granted in Australia, like hospitals and schools and the like.

Dont get me wrong, I hate paying more tax than I have have to, but I also believe that you should "render unto Caesar that which is Caesars"...

I am not necessarily convinced that the presumption that a lower corporate tax rate will automatically trickle down into everyones pockets, because not everyone is as altruistic as they potentially need to be.

so there is always that conflict between letting people be the masters of their own destiny and allow market forces to dictate where the money goes, and having the moral compass to provide for those who may not be able to provide for themselves......that probably makes me a capitalistic communist (aka hypocrite)......and I doubt there is ever going to be a perfect answer for everyone.....

but for me, the idea of reducing the corporate tax rate is in principal a good idea, but there is a cost somewhere else.....and we dont get to decide who gets to pay that cost.....its in the hands of the incumbent government.....who are motivated by votes, not altruism.......

wow thats deep for a Friday morning isnt it!!!!!

3 months ago

As a small business owner, I'm not sure much changes. With the dividend imputation credit system, the more the company pays tax, the less the shareholders (small business owners) pay when they extract money as dividends. So its neither here nor there as long as cash flow is ok. The ATO is pretty good in structuring tax payments in any event.

I'd far prefer state and national governments look at the taxes that really hurt SME growth. For example, payroll tax is a ripper - the higher our payroll, the more we pay in this horrible tax. Really unsure what services are provided in return? The money we spend on this could employ another couple of people who would pay income tax. Big picture could be much healthier.

Comments

Hi Jamie. This is getting a bit technical, but are you aware that the change in company tax rate is going to have a negative impact on the "harversting" of imputation credits later on???
for example, a company that paid 30% tax on income in (say) 2014, will only every be able to frank future dividends to its tax rate now....so, if the corporate tax rate drops to 25%, there is 5% of franking credits that are effectively locked away that the company will NEVER be able to distribute.
Its a bit of kick in the teeth to business owners who have set things up to manage tax based on one set of rules, and then have the goal posts shifted on them.......
cheers
BC

I totally think that it is about time to cut company & business tax. Less tax = more employment & training opportunities = longer lasting economy

Further to my philosophical rant about corporate tax rates, what does everyone think about individual tax rates??? Is the marginal tax system the best tax system??? are the rates and margins right? Should the wealthy end of town pay more? Do low income earners pay enough??? Is the current system of rebates and government benefits based on income too complicated?? (YES!!!) Should families be taxed as "families" not as "individuals"????
cheers
BC

Changing Corporate Tax Rates helps (short term) available cash flow for SME's using company structure. There has been no mention about assisting the SME market operating under Sole Trader, Partnership and Trust structures - where the individuals pay tax at marginal rates every year (Don't like S.T. or Partnerships in general anyway).
I would rather see the inefficient taxes like payroll tax cleared away, and some genuine incentives provided for the SME market.

BC - I have made a few comments over the years about taxing families as such, to assist in the costs of raising a family. Perfect example is the FIFO family, where Dad (typically) is working a 4/1 roster and Mum has to do al the running around with little support - and can't really manage a lot of time for a job. The tax on a $150k salary is huge, with nice savings if slit to effeectively 2x $75 incomes. They don't get any other Centrelink/government support.

There is always plenty for the Gov't to consider!

Business tax cuts are a no brainer in my view. By providing cuts to employers, this will drive confidence and allow entrepreneurs to be comfortable in taking risks, lending, and employing more staff.
This will help drive the economy and innovation in various industries. I think it's a positive move. Considering it's a no brainer, Canberra should catch on, as that seems to be a common intellectual theme there.

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