It's an argument mounted by some of the most profitable companies in the country whenever the opportunity arises.
But new analysis from The Australia Institute lists ten reasons why cutting company tax would not achieve its goal of increasing investment and would only hurt ordinary Australians.
The analysis finds:
- Giving billions in tax cuts to big business would strip $57 billion out of the budget, meaning less to spend on things like hospitals and schools.
- When corporate tax cuts were introduced in the US, vital public services, like welfare benefits, were the first to go.
- Company tax cuts would deliver billions to the most profitable companies in Australia, like the big four banks.
- A third of the benefit of tax company tax cuts would go to just 15 companies.
- The big winners would be tax dodgers and foreign shareholders.
- There's little evidence that company tax cuts would increase employment or economic growth.
- The 2017 company tax cuts in the US did nothing for employment or investment.
- Most foreign investment already comes from countries with lower tax rates.
- There are better ways to help the economy.
- Tax cuts are political poison, desperately unpopular with voters.
"If you cut the company tax rate from 30% to 25% the big winners would be the big banks, mining companies, and companies in highly uncompetitive industries, like Telstra, Woolies and Coles," said Jack Thrower, Senior Economist at The Australia Institute.
"The main argument for company tax cuts is that they supposedly boost investment, which 'trickles down' to ordinary Australians.
"There is little evidence that corporate tax cuts really would increase investment and even less evidence that any perceived benefit would trickle down to anyone other than shareholders overseas.
"The investment Australia needs most is government investment in public infrastructure, like hospitals, schools, public transport, roads, and so much more. That kind of investment needs the very same tax dollars that a company tax cut would take away.
"Even the Commonwealth Bank, which would benefit massively from a company tax cut, says it should not be a priority."
