HD. Business Trump-style tax cuts ‘not needed’. BY. AND

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SE Business
HD Trump-style tax cuts ‘not needed’
BY ANDREW WHITE
WC 346 words
PD 5 December 2017
SN Herald-Sun
SC HERSUN
ED HeraldSun
PG 22
LA English
CY © 2017 News Limited. All rights reserved.
LP
TAXATION AUSTRALIA should be wary of rushing to follow sweeping plans in the US to cut
personal and corporate tax rates, a leading independent economist says.
Saul Eslake says Australia should be cautious about following the US because our effective tax rates
are among the lowest in the developed world He says it is misleading to compare headline rates in
Australia and the US, where the Senate has approved sweeping changes to the tax system.
TD
President Donald Trump has vowed to cut the US corporate tax rate from 35 per cent to 20 per cent,
and business lobby groups say Australia should cut its company tax rate from 30 per cent.
Mr Eslake, a former chief economist at ANZ and Bank of America Merrill Lynch’s Australian
operations, said the primary beneficiaries of a cut in company tax rates in Australia would be the
foreign shareholders of Australian companies and the majority owners of foreign interests.
“There is no guarantee that if they are allowed to keep more of their Australian earnings than they
are at the 30 per cent tax rate, that they would invest more of it in Australia,” Mr Eslake said.
A 2012 US Congressional Budget Office study found that at just 10.4 per cent, Australia was in the
bottom half of G20 economies for effective tax rates, which take into account investment allowances
and depreciation rates.
The average corporate rate paid in Australia — the proportion companies pay relative to their
incomes — was 17 per cent. In the US, the average actually paid was 29 per cent — the third highest
in the world — and the effective rate is 18.6 per cent, the fourth highest.
The US ranking would change dramatically from the cuts planned there.But because both the House
of Representatives and Senate versions of the US tax cut Bill aim to scale back or remove
deductions that have been available to offset the headline rate, it is not yet clear where the US would
land in any new international rankings.
NS ccptax : Corporate Taxation | c13 : Regulation/Government Policy | ccat : Corporate/Industrial News |
ncat : Content Types | nfact : Factiva Filters | nfcpin : C&E Industry News Filter
RE austr : Australia | usa : United States | apacz : Asia Pacific | ausnz : Australia/Oceania | namz : North
America
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AN Document HERSUN0020171204edc500010

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