Leave company tax alone, says former RBA boss
Three weeks out from the 2016 Budget, the former governor of the Reserve Bank of Australia, Bernie Fraser, has implored the federal government not to consider cutting company tax rates, dubbing such a move as the ‘unkindest cut of all’.
With increases in GST and personal income tax cuts ruled out, the government has suggested cutting the current company tax rate of 30%, in the hope a reduction would allow businesses to invest more and thus grow the economy.
Talking to ABC Radio, Fraser said, “History shows it doesn’t work that way.”
Fraser believes that a cut in company tax rates does not lead to more jobs and that such cuts would rule out other important spending programs, leading him to say, “That would be the unkindest cut of all.”
Research from the University of Victoria has shown that a cut in company tax rates could see Australians worse off by an estimated $1,600 each, with significant consequences for those seeking home loans.
Fraser is among scores of academics and community leaders who have put their names to an open letter to Prime Minister Malcolm Turnbull, urging that the government not tamper with the current company tax rates in the forthcoming budget.
“We urge the prime minister and all political leaders not to cut taxes at this time - and certainly not for companies,” reads the letter.