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The economic impact of a corporate tax rate cut in Australia

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Published on 01 Sep 16 by "TAXATION IN AUSTRALIA" JOURNAL ARTICLE

The Henry Review’s final report, Australia’s Future Tax System – Report to the Treasurer (2009) recommended reduction of the corporate income tax rate from 30% to 25% in the short to medium term with the timing subject to economic and fiscal circumstances. This paper considers how such a reduction will impact the Australian economy, including its impact on revenue, regional tax competition and the disparity between the corporate income tax and personal income tax regimes. The authors conclude that the reduction will necessitate trade-offs between the principles of a good tax system, including horizontal equity and simplicity. The reduction would produce a significant gap in government revenue. While some economic gains are expected, there remains uncertainty as to when and how much this will cover the loss of revenue and how any shortfall may be funded.

Author profiles

Frederick Mahar
Frederick is the Principal at FM Mahar & Associates.
Current at 1 April 2015
Click here to expand/collapse more articles by Frederick Mahar.
Jing Lin He
Jing is a MTax Student at UNSW. - Current at 07 September 2016
Jon Longridge
Jonathan is a MTax Student at UNSW. - Current at 07 September 2016

 

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