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CANBERRA: Australia’s government has appealed to lawmakers to back its flagship economic plan to cut corporate taxes as it seeks to respond to falls in US and UK company tax rates. Canberra wants to progressively cut corporate taxes from 30 per cent to 25 per cent by 2025 for all companies, in a bid to boost growth and compete for investment. MPs in the lower house backed the government’s plan in a vote 75 to 71 on Thursday. However, the bill is struggling to win support in the Senate, where opponents allege the A$65bn ($51bn) tax cut will increase the budget deficit, mainly benefit shareholders of foreign companies and do little to boost the economy.
This corporate tax plan is a disaster that would cost every Australian man, woman and child about A$2,000,” said Peter Swan, professor of finance at University of New South Wales business school. “Because of dividend imputation it would simply benefit foreign companies without increasing investment in Australia,” he said. The business lobby supports Canberra’s drive to cut taxes, with the Business Council of Australia warning Australia risks falling to “the back of the pack” in terms of global competitiveness. Increasing competition for inward investment is prompting some developed countries to reduce corporate taxes.
