Submission | Enterprise Tax Plan – Senate Inquiry

The Australian Chamber supports the Government’s Enterprise Tax Plan Bill, particularly the progressive reduction in Australia’s company tax rate to 25 per cent for all businesses by 2026-27.

Reducing the company tax rate increases the after-tax return on Australian projects for investors. This boosts investment, which drives higher productivity resulting in stronger profits, higher wages and more jobs. While tax revenue falls due to the lower headline rate, this is offset by revenue gains from increased profits and wages. A lower company tax rate also increases revenue by making it less cost-effective for companies to restructure their operations to avoid paying tax in Australia.

Treasury modelling indicates that reducing Australia’s company tax rate from 30 per cent to 25 per cent would boost Australia’s national income by 0.6-0.7 per cent, including a 0.4-1.1 per cent increase in take-home pay for workers. This boost in living standards should provide compelling support for the Government’s proposed company tax reforms. However, opponents of company tax reform have argued that the results of the Treasury modelling should be disregarded for various reasons. The Australian Chamber’s views on these objections are detailed in the remainder of this submission and summarised in the table below.