US tax cuts leave Australia further behind: Westacott
THE nation’s peak business lobby group says US President Donald Trump’s plan to slash the US corporate tax rate highlights how badly Australia is being beaten in the fight for investment.
Business Council of Australia chief Jennifer Westacott says a push by Mr Trump to radically recast the tax system in the world’s biggest economy, including cutting its corporate tax rate to 20 per cent, must serve as a wake-up call to policymakers here.
“Make no mistake, we are in the midst of a global fight to attract investment dollars and Australia is lagging badly,” she said yesterday.
“Australia’s tax competitiveness is already woeful and our broader competitiveness ranking is mediocre at best. US company tax reductions of this magnitude will only push us further behind.
“There is no question that US tax reform will significantly change the arithmetic for global investors considering investing in Australia and that can only be bad news for Australian workers and businesses.”
Overnight Wednesday, Mr Trump unveiled major points of his tax plan, which will cut the corporate tax rate from 35 per cent to 20 per cent if ultimately passed by Congress.
Sole proprietorships and partnerships — legal structures that cover small businesses — would pay no more than 25 per cent.
In a bid to boost business spending, companies would be allowed to immediately write off capital expenditure for at least five years instead of only being able to deduct it gradually.
The plan would also allow US companies to repatriate an estimated $US2.5 trillion ($3.2 trillion) in cash held offshore at a low one-off charge that is yet to be specified.
For individuals, seven tiers of income tax would be scaled back to three, set at 12 per cent, 25 per cent and 35 per cent.