Media Release

Corporate tax rate cut divides forum delegates

The benefits of overhauling the corporate tax system are being compromised and the focus needs to shift toward long-term economic gains, according to the Institute of Chartered Accountants in Australia (the Institute).

The likelihood of a drop in the corporate income tax rate was debated this morning on day one of the federal government’s tax forum in Canberra.

The Institute’s tax counsel and forum delegate, Yasser El-Ansary, says groups involved in the tax reform discussion need to redirect efforts towards a holistic view of the benefits of a more efficient and competitive tax system.

“The conversation needs to move away from the ‘us’ and ‘them’ mentality on business tax reform. Some groups believe there should not be a cut to the corporate income tax rate because it would benefit business to the detriment of workers, but there is compelling economic evidence that in the long-run, reducing the [corporate income tax] rate delivers a boost to employment and real wages,” he says.

Mr El-Ansary says on the back of today’s discussion, more detailed work should be done in the short-term to support the economic arguments in support of lower corporate income taxes. There are some in the community who are yet to be convinced of the broader economy-wide benefits of reform in this area.

“The argument needs to be totally reframed. The more time we spend debating among ourselves on this issue the less time we have to position Australia in capitalising on the opportunities presented by the global marketplace,” he says.

Article last Updated 4 October 2011