Yet another report has emerged deriding the Coalition’s proposal to cut the company tax rate from 30% to 25% over a decade. From The Guardian:
More than 40% of the benefit of the Coalition government’s $48bn company tax cut will go offshore to shareholders of multinational corporations and foreign tax authorities, a new report has found.
The report by academics at the University of Technology Sydney, commissioned by GetUp, reviewed 250 of the largest payers of company tax in 2013-14.
It found cutting the corporate tax rate to 25% would result in $2.18bn a year flowing offshore in dividends to overseas-based investors. That represents 40% of the total cost of the $48bn tax cut over 10 years.
Australian shareholders will get $2.87bn, 52% of the total tax benefit. The beneficiaries of the remaining 8% cannot be determined.
The report noted that due to Australia’s system of dividend imputation, domestic shareholders only pay the difference between the corporate tax rate and their own marginal tax rate for income earned on share dividends.
“This means the income tax of Australian shareholders will rise proportionate to any benefit received from the corporate tax cut,” it said…
GetUp national director, Paul Oosting, said the report showed “the government’s big economic plan is not much of a plan at all – sending billions of dollars offshore, boosting the profits of foreign multinationals”.
“Prime minister Malcolm Turnbull insists that his $48bn tax cut will trickle down to supercharge the economy, but you don’t create jobs or boost growth by lining the pockets of foreign investors.
The conga-line of commentators questioning the company tax cut continues to grow. Here’s the list (sorry if I have missed anyone):
- Victoria University senior research fellow, Janine Dixon
- The Grattan Institute
- The Australia Institute
- Goldman Sachs
- ABC’s investigative reporter Stephen Long
- Fairfax writers Peter Martin, Ross Gittins, Michael Pascoe, and Mark Kenny
- Former Liberal leader, John Hewson
- The Australian people
That’s a pretty extensive (and growing) group.
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