Company taxes should be the first target of any push to boost economic growth through tax cuts, says new research from CEDA.
Tax Cuts to Compete: The influence of corporate taxation on Australia's economic growth aims to identify which tax cuts will do most to maximise Australia's economic growth. It finds that company tax cuts will drive growth more effectively than personal income tax cuts.
The findings in Tax Cuts to Compete are supported by the experience of countries such as Ireland, whose very low rates of company tax appear to have played a key role in its remarkable economic growth since 1987.
The CEDA report also finds that Australia could fund substantial company tax cuts by abolishing its system of dividend imputation - the system that currently delivers "tax credits" to shareholders where a company has already paid tax on its profits. Abolishing dividend imputation could fund a company tax rate of as low as 19 per cent, making a major contribution to economic growth without requiring spending cuts or tax increases elsewhere in the economy.
CEDA acting chief executive Greg Meek says the report explores how Australia can make itself most attractive to international investors. "The race for international capital is one area where Australia really does compete with other nations," he says. "Australia needs to keep finding better ways to win this race."
This is the second tax report written for CEDA by Lateral Economics chief executive Dr Nicholas Gruen. His previous paper on personal income tax, published earlier this year, found that if personal tax cuts are to be used to boost economic growth, they should concentrate on lower income earners.
For further information please contact:
John Harris
Corporate Relations Director
Phone 03 9652 8415
Email info@ceda.com.au
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