One of the centrepieces of Scott Morrison’s first budget – and the Turnbull government’s re-election platform – is the plan to reduce the company tax rate for all businesses to 25% over a decade.
Australia has been falling behind other OECD countries which compete for investment from multinationals. In reaction tonight, David Linke, KPMG managing partner said that while Australia would make progress, but it still risked being left behind by other nations like the UK or Singapore with sub-20% corporate tax rates.
“We welcome the proposed reduction in the corporate tax rate to 25% but transitioning it over an eleven-year period is likely to result in Australia falling further behind the tax rates of other capital-importing countries,” Linke said.
“Increased foreign investment is particularly important for our living standards in the future. It cannot be stated often enough that a significant portion of the benefit of a reduction in the company tax rate flows through to higher real wages. This measure will ultimately give businesses greater incentive to invest.”