The Australian Industry Group also said it is unsurprising that there is little support in the business community to finance a company tax cut from within the business tax system.
“Our members were never convinced that raising tax on business was a sensible way to finance a cut in tax on business and they expected that national benefits would be marginal at best,” AIG chief executive Innes Willox said in a statement.
However, Willox said AIG was relieved the Business Tax Working Group did not recommend a reduction in the Research and Development Tax Incentive in return for a small reduction in the company tax rate.
“This measure would have detracted from longer-term economic activity by much more than activity would have been boosted by the small rate cut its removal could have financed,” Willox said.
Despite the stalemate reached by the report, AIG will continue to push for a company tax cut.
“We need to look more broadly and more fundamentally at our tax system to find ways to finance cuts in our company tax rate, which is now alarmingly higher than the majority of OECD countries,” Willox said.
“Reducing the company tax rate should be our top tax reform priority. Finding a sensible way to finance it will require looking beyond the business tax system.”
