The evidence is unequivocal, company tax cuts create jobs
Generating jobs and higher economic growth are the key objectives of my government’s economic plan, says Malcolm Turnbull.
Analysis
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Generating jobs and higher economic growth are the key objectives of my government’s economic plan.
And we know that by reducing business taxes we will get more investment and more jobs.
Every dollar reduction in company tax creates up to $4 in additional economic activity. And most economic benefits go to workers.
Reducing business taxes to levels that are competitive in the region will promote investment.
The alternative is that we lose jobs to our neighbours including New Zealand and Singapore.
More investment will lift productivity and this will lead to higher wages and more and better jobs. It’s that simple. The relationship is very clear and direct.
Our enterprise tax plan is carefully calibrated so the earliest benefits go to smaller businesses because they move faster and are more innovative. The plan will apply first to smaller businesses with a turnover of $10 million or less. It will then work up so that after 10 years all Australian companies will have their tax rates reduced from 30 to 25 per cent.
The careful, rigorous analysis we commissioned from the Department of Treasury found that, over time, our enterprise tax plan will cause investment to surge by almost 3 per cent. This will generate a permanent increase in GDP of more than 1 per cent over the long term.
It will substantially increase employment and cause real wages to rise permanently by as much as 1.2 per cent.
Workers will retain at least twice as much of the likely gains in national income than will investors including shareholders.
This is why Labor advocated cutting the company tax rate when in government. That’s why Chris Bowen advocated it in his book.
That’s why Ken Henry, former Treasury secretary and author of Labor’s tax review, said in 2011: “The consensus of public finance theorists is that in Australia, if the company income tax were to be cut, the principal beneficiaries will be workers.”
Our opponents claim that a high proportion of the tax savings will simply flow to the American Internal Revenue Service. Our own Treasury modelling shows that these claims are manifestly untrue.
At the same time, we are taking tough measures to ensure multinational corporations pay their fair share of tax in Australia.
We believe in lower taxes, but paying them is not optional!
So we are putting in place the toughest anti-avoidance laws in the developed world. And we are greatly adding to the capacity of the Australian Taxation Office to enforce those laws.
The waning of the mining construction boom means we cannot rely on natural advantages alone.
The new economy is highly mobile and we don’t want our jobs to go overseas. But now Labor says it is easier to raise taxes and spend more.
But how are they going to grow the economy? How are they going to create jobs?
Every measure we have laid out, in contrast, is calculated to deliver stronger economic growth and more jobs.
Malcolm Turnbull is the Prime Minister
Originally published as The evidence is unequivocal, company tax cuts create jobs
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