It sure does seem like the Turnbull Government has picked a loser by announcing that it would cut the company tax rate from 30% to 25% over a decade, with the overwhelming majority of voters appearing strongly opposed to the move.
In late March, ReachTEL conducted a survey of around 750 residents in each of the electorates of Dickson, New England, and Page asking: “The tax rate for companies is 30%; do you think this should be increased, decreased or stay the same?”
In each electorate, 75% to 80% of respondents wanted the company tax rate to either remain the same or increased. You can view the results here.
Now ABC’s Vote Compass has conducted polling of Australian’s attitudes towards cutting company taxes, and finds that an overwhelming majority of Australians want large businesses and multinationals to pay more tax, with a small majority of respondents wanting small businesses to pay either the same or more tax:
An interesting aspect of the above result is that cutting the company tax rate would do little to benefit small businesses anyway. This is because they are almost exclusively domestically owned and typically pay-out almost all of their earnings as profits to their owners. Hence, any reduction in the company tax rate would be offset by a reduction in franking credits, thus leaving the owners no better-off from a company tax cut.
Indeed, almost all of the benefit of any company tax cut would flow to foreign owners, since they cannot access Australia’s dividend imputation system. And there is a good chance that a large share of any tax savings would be pocketed by the foreign owners, rather than reinvested in the Australian-based business.
For this reason, modelling from Victoria University senior research fellow, Janine Dixon, shows that cutting company taxes could actually reduce national income – the best measure of Australian living standards – because the lion’s share of the benefits would flow offshore:
So, not only is the Turnbull Government’s company tax cut policy an expensive dud, but an unpopular one as well.
