Australia's company tax: options for fiscally sustainable reform
Date
2018
Authors
Ingles, David
Stewart, Miranda
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Volume Title
Publisher
Taxation Institute of Australia
Abstract
The Australian Government proposes to reduce the company tax rate from 30 to 25 per cent.
However, there are widespread concerns that the fiscal cost is not affordable. This paper
considers alternative reforms of corporate taxation that could fund a corporate tax rate cut. We
address key non-neutralities in the corporate tax system and consider key international
developments, including the enactment of the Trump tax plan in the United States, which lowers
the US corporate tax rate to 21%. We examine the case for abolition of dividend imputation in
favour of a lower headline company tax rate and consider the spectrum of reform options for the
corporate tax base, which ranges from the cash flow tax and allowance for corporate equity or
capital to a comprehensive business income tax which would eliminate interest deductibility.
These measures (which could co-exist in a hybrid system) might be accompanied by discounts
on dividend and interest income at the personal level, in replacement of dividend imputation
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Australian Tax Forum
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Journal article
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2037-12-31
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