{"id":108150,"date":"2025-07-31T17:57:11","date_gmt":"2025-07-31T17:57:11","guid":{"rendered":"https:\/\/www.europesays.com\/us\/108150\/"},"modified":"2025-07-31T17:57:11","modified_gmt":"2025-07-31T17:57:11","slug":"productivity-commission-backs-biggest-australian-company-tax-rate-cut-in-40-years-tax","status":"publish","type":"post","link":"https:\/\/www.europesays.com\/us\/108150\/","title":{"rendered":"Productivity Commission backs biggest Australian company tax rate cut in 40 years | Tax"},"content":{"rendered":"

The company tax rate would be slashed to 20% for all but the very biggest businesses as part of an \u201cambitious\u201d Productivity Commission<\/a> proposal aimed at boosting investment and revitalising the country\u2019s flagging productivity.<\/p>\n

The plan would deliver the biggest reduction in the company income tax rate in nearly 40 years and dramatically shift Australia from having one of the highest to one of the lowest rates in the world.<\/p>\n

The PC on Thursday night released its interim report on how to create a more dynamic and resilient economy, the first of five separate inquiries commissioned by Jim Chalmers<\/a> late last year.<\/p>\n

Alex Robson, the PC\u2019s deputy chair, said the tax proposal was \u201cambitious but sensible\u201d.<\/p>\n

Sign up: AU Breaking News email<\/a><\/p>\n

\u201cWe need to spark growth through investment and competition \u2013 the best way to do that is to reform our company tax system,\u201d he said.<\/p>\n

Robson argued that Australia\u2019s high headline company tax rate versus its peers was a barrier to foreign investment and there was evidence that it was driving local entrepreneurs to set up business in lower-taxing countries.<\/p>\n

He argued that lowering the tax rate for the more dynamic smaller and medium-sized business sector would provide the biggest \u201cbang for buck\u201d when it came to driving local investment.<\/p>\n

The PC also recommended the government do more to reduce the \u201cever-growing thicket of rules and regulations\u201d, which was acting as a handbrake on growth by making it more difficult to, for example, supply homes, build green energy infrastructure and start a business.<\/p>\n

\u201cBetter regulation and approvals\u201d will be a major area of discussion on day two of Chalmers\u2019 three-day economic reform roundtable<\/a> to be held in three weeks\u2019 time.<\/p>\n

Chalmers, in a statement accompanying the release of the PC\u2019s interim report, said \u201creducing regulatory burden is an important part of our productivity effort\u201d but made no mention of the company tax plan.<\/p>\n

Labor has sent no signals that company tax relief is among its reform priorities<\/a> and has instead looked at ways to crack down on tax avoidance by multinationals and make changes to the resource rent tax for gas exporters.<\/p>\n

Ed Husic, the former industry minister, in May last year was reportedly scolded for publicly backing a lower company tax rate<\/a> or expanded investment allowance.<\/p>\n

A survey by Newgate<\/a> released this week found that only 25% of Australians supported cutting the company tax rate, and nearly half opposed it. But Robson said the PC was \u201cfocused on good reform ideas\u201d.<\/p>\n

\u201cWe think it\u2019s a good proposal that\u2019s worthy of serious consideration, and we leave the politics to others.\u201d<\/p>\n

Economists have long blamed Australia\u2019s declining productivity on a similar decline in capital expenditure as a share of the economy and Robson said the company tax cut was the \u201cmain lever\u201d to drive investment growth.<\/p>\n

Under the plan, the company tax rate on the 1.2m companies that earn below $50m would drop from 25% to 20%, while the rate for roughly 7,000 businesses earning between $50m and $1bn would fall from 30% to 20%. That would leave about 500 of the biggest firms with no additional tax relief.<\/p>\n

The deep cut to the company income tax rate would be accompanied by a world-first net cashflow tax of 5%, which would apply to all businesses and help make the tax package \u201cbroadly\u201d revenue neutral over the longer term.<\/p>\n

\u201cThe introduction of the net cashflow tax means that while most companies will pay less tax, the total tax burden will rise for some large companies, especially those not undertaking new investment,\u201d the report said.<\/p>\n

\u201cOverall, the new tax will incentivise new capital expenditure across all firm sizes.\u201d<\/p>\n

The PC will now conduct another round of consultation ahead of a final report due by the end of the year.<\/p>\n","protected":false},"excerpt":{"rendered":"The company tax rate would be slashed to 20% for all but the very biggest businesses as part…\n","protected":false},"author":3,"featured_media":108151,"comment_status":"","ping_status":"","sticky":false,"template":"","format":"standard","meta":{"footnotes":""},"categories":[2],"tags":[4740,50],"class_list":{"0":"post-108150","1":"post","2":"type-post","3":"status-publish","4":"format-standard","5":"has-post-thumbnail","7":"category-news","8":"tag-australia","9":"tag-news"},"share_on_mastodon":{"url":"https:\/\/pubeurope.com\/@us\/114949144209286154","error":""},"_links":{"self":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/108150","targetHints":{"allow":["GET"]}}],"collection":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts"}],"about":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/types\/post"}],"author":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/users\/3"}],"replies":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/comments?post=108150"}],"version-history":[{"count":0,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/posts\/108150\/revisions"}],"wp:featuredmedia":[{"embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media\/108151"}],"wp:attachment":[{"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/media?parent=108150"}],"wp:term":[{"taxonomy":"category","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/categories?post=108150"},{"taxonomy":"post_tag","embeddable":true,"href":"https:\/\/www.europesays.com\/us\/wp-json\/wp\/v2\/tags?post=108150"}],"curies":[{"name":"wp","href":"https:\/\/api.w.org\/{rel}","templated":true}]}}