Mining and Heavy Industries

Minerals Council joins push for 20% company rate

A reduction to Australia’s company tax rate would most benefit wage-earners and consumers, the Minerals Council of Australia has argued in a move expected to heat up the company tax reform debate in the lead-up to the federal election later this year.

Minerals Council chief executive Brendan Pearson on Tuesday cited a study by Dr Jack Mintz from the School of Public Policy at Canada’s University of Calgary.

Dr Mintz’ analysis of Australia’s company tax competitiveness proposes a move from the current 30% tax rate to a 25% rate, and says the government should also consider an eventual move to 20%, like that of the United Kingdom.

The paper was commissioned by the Minerals Council of Australia.

“Australia has become stuck in the quicksand, watching others pass by,” Dr Mintz’ paper argues. “Australia’s global tax competitiveness has already slipped markedly … mining is more heavily taxed in Australia compared to most major competitors.”

Footing the bill for this tax excess, the paper argues, are the people.

“Certain myths pervade discussion about company taxes,” the paper says. “One is that company taxes are paid by the rich and powerful.

“A survey of recent studies shows that at least two-thirds of company income tax is shifted onto labour through higher consumer prices, wage cuts and layoffs.

“Company tax is thus a clumsy instrument to achieve progressivity since it is not the company that bears the tax.”

Pearson believes the paper delivers a firm message to the federal government in the lead-up to this year’s election.

“Australia’s company tax rate is now the fourth highest in the 34-member OECD and has failed to match the global trend toward lower company rates,” Pearson reported.

“The report demonstrates that the burden of Australia’s high company tax rate falls largely on wage earners and consumers.

“High company tax rates inevitably lead to lower investment, with consequent adverse impacts on innovation, productivity and wage growth.”

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