Company tax in Australia is the second-highest in the OECD

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Economists say the effective average tax rate of 28.5 per cent on company income makes the country uncompetitive against global rivals and workers poorer.

Already a subscriber?Australian businesses face the second-highest corporate tax rate in the developed world, a new report shows, prompting economists to warn that the uncompetitive tax system is stifling investment and making workers poorer.

UNSW economics professor Richard Holden said Australia had gone from having one of the lowest corporate tax rates in the world in the 1990s to one of the highest today.“Almost every other country has been reducing their rates over time, and we haven’t,” Professor Holden said. The Turnbull government tried to lower the company tax rate from 30 per cent to 25 per cent in 2018, but was forced by the Senate to instead createIndustry Minister Ed Husicto call for reform to corporate taxes, either by lowering the statutory rate or through an economy-wide investment allowance.

Professor Holden said the argument against company tax cuts was that it would benefit the big banks and mining companies whose capital was less mobile and would be less likely to invest more.

 

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