Do-Nothing Malcolm gave a keynote address last night at The Sydney Institute’s 2017 Anniversary Dinner, whereby he pushed the case for further company tax cuts, claiming that the benefits will flow to workers [my emphasis]:
Most of the burden of high company taxes is borne by workers because high taxes discourage firms from expanding, from hiring and from paying better wages…
Company tax, as I have noted is ultimately a tax on workers, a tax on jobs, a tax on wages. Reducing company tax means businesses can invest more, employ more staff, and pay them more.
An uncompetitive business environment can be the difference between firms investing in Australia or choosing to invest elsewhere.
If we don’t act now we will be left behind – not only will we miss out on investment, Australian jobs will go offshore, our living standards will stagnate.
That’s why reducing the tax burden on business is so critical to our competitiveness – no other single tax reform by the Commonwealth can do more to grow the economy…
And we are committed to delivering our full company tax policy, which will progressively reduce company tax to 25 per cent for all companies over the decade. We will continue to work hard to secure the support of the cross-bench for that.
Treasury modelling shows that once fully implemented, our policy will permanently increase the size of the economy by more than 1 per cent – that’s more than $17 billion in today’s dollars, every single year…
If the Turnbull Government’s company tax cut program is the best policy tool available to grow the economy, then Australia is in deep trouble.
According to the national accounts published by the ABS, Australia’s quarterly growth in real GDP has averaged 0.9% since 1959. Thus, the centre piece of the Turnbull Government’s ‘growth and jobs’ agenda – cutting company taxes – would deliver the equivalent of around one quarter’s growth in 20 years time at a massive estimated cost of $8.2 billion dollar cost per year! That’s a rounding error rather than genuine reform.
Former Australian Treasury secretary and RBA governor, Bernie Fraser, is clearly unimpressed, expressing concern about the growing gap between the rich and poor in Australia, which will be made even worse by the company tax cuts and the decision around penalty rates. From The SMH:
Former Reserve Bank boss Bernie Fraser has savaged the Fair Work Commission’s cuts to penalty rates and the Turnbull government’s company tax cuts, saying the measures will further entrench inequality but do little to produce jobs and growth…
Mr Fraser has told Fairfax Media that Australia is approaching a “danger point” where the gap between rich and poor becomes so vast it could have “awful” far-reaching consequences at every level of Australian society…
“It was another illustration of what I’m afraid is an increasing trend towards unfairness in so many ways in policy matters,” Mr Fraser said. “Some people now have much more than they really need and so many more have not even enough to get through.
“And you contrast that with the government’s position to commit – at this stage – $25 billion to reduce company taxes. Who are the recipients of those cuts?
“The main recipients will be the dividend holders – not traditionally a disadvantaged, vulnerable section in the community. And the other people who will benefit will be the senior executives of those companies giving themselves bonuses.
“All the while the vulnerable people are being squeezed at the other end”…
He also says the company tax cuts will deliver minuscule benefits off “in the never never”. Meanwhile the inequality gap is only widening as the ruling class looks after themselves rather than the vulnerable and needy.
No wonder Fairfax’s Ross Gittins laments that Australia is in the era of “fake government” – where the Coalition cares only about giving the impression of reform, while greasing the wheels of its big business backers.
