Tax cuts aren’t enough to make us attractive to offshore capital

Forget plans to cut our corporate tax rate, here’s seven other measures we could take to make us more competitive.

We are set to become a much less attractive place for overseas investment compared to the US and others who understand the game.

No one wants to tell the government the truth but Australia’s plan to reduce our company tax rate from 30 to 25 per cent by 2026-27 is a global joke.

The US is planning to reduce company tax to 15 per cent and to do it fairly quickly, so the token tax reduction we are proposing — which can’t get through the parliament — will make no difference.

We are set to become a much less attractive place for overseas investment compared to the US and others, like the UK, who understand the game.

And even if we cut the corporate tax rate to 15 per cent it still wouldn’t be enough. If we want to be attractive to overseas investors in this new world, we will have to do much more than simply cut corporate tax rates.

But something can be done. Here is my seven-point plan and if any one of these points is bypassed or put in the “too hard basket” then it’s probably better not to try implementing the changes until the community becomes desperate.

Here’s the plan:

• Leave the current useless company tax reduction proposal where it is — the “too hard basket”. Tomorrow I will discuss this plan in more detail because it raises issues that few have addressed.
• Understand the Trump plan, which goes way beyond tax rates. He will slash executive salaries by allowing independent contractors to go onto the 15 per cent company tax rate. We will watch the detail but I believe Trump will negotiate executive migration deals with all the majors but to be eligible for that deal they will need to invest. It’s an old Trump ploy to create chaos and then offer a way out to those who play ball. And, as we know, he will flood the country with domestic oil and gas and one by one get companies in many industries to erect plants for fear of tariff increases.
• Understand and realise just how far behind we are in the race when it comes to non-tax matters. Our energy policies are third world and we are set to be one of the most expensive countries to operate in. We also have a tax commissioner whose people enjoy issuing false and fictitious legal opinions to bankrupt top corporate contributors with key skills as we saw in the infamous “Douglass case” (Chris Jordan’s last shot at righting a wayward ATO, November 29). Getting permission to do anything is a nightmare because of local councils and pressure groups. I could go on but that’s enough.
• Trump loves to deal. In a deal with the US government, offer US companies who come here the same tax rate as the US; we don’t need to change the independent contracting rules we just need to get tax people to read them and apply the rules in the situations created above; executive immunity from the Douglass-style excesses of the Australian Taxation Office by making the Inspector General of Taxation the final arbiter of executive tax matters of companies that enter the plan.
• Medical research and drug development should be a key target.
• We need security of energy at reasonable prices. Levy NSW and Victoria to help raise the money to build a gas pipeline to either the northern territory or the Bowen Basin.
• We need to have a competitive commercial building industry. Given the introduction Australian Building and Construction Commission was greatly delayed by the Senate, introduce mirror legislation to the WA proposal that extends the unfair contract principles to protect small subcontractors on building sites. It’s more powerful than the ABCC (WA’s line in the construction sand is a win for subcontractors, December 6)

I am sure readers will have even better ideas

If we want to be an effective competitor for overseas capital we need to target our tax reductions and remove the threat of Douglass-style tax attacks on their executives and contractors and act like Trump in securing our energy needs.