The call by the Australian Chamber of Commerce and Industry (ACCI), Australian Industry Group (Ai Group), Business Council of Australia (BCA) and Minerals Council of Australia (MCA) has been made in a joint statement today.
There have been a lot of claims made about business during this election campaign, many of which would have confused and misled the community about why there should be a strong environment for all businesses, including more competitive business tax arrangements.
Australia faces considerable challenges over the coming decades. These include our budgetary position, our ageing population, greater globalisation and technological changes.
Against this backdrop, we must take every opportunity to maintain and indeed improve on our high living standards - including the capacity to create better, higher paid jobs, and to fund high-quality health, education and other social services. The simple reality is strong businesses are critical to this.
Australian private businesses employ 80 per cent of all workers - around 10 million people. Almost five million Australians have investments in the share market with and Australian on average holds $23,000 in domestic equity through their membership of superannuation funds.
Businesses depend on each other too. There is over $440 billion in economic activity between businesses of all sizes Australia each year. If you hold back one section of the business community you are effectively holding every business back.
Much of the groundwork for Australia's relative economic success was laid with reforms decades ago. We need to lay the groundwork for the next 20 years and beyond now while we have the chance or our competitors will overwhelm us.
The business community is united that a strong business environment including more competitive business taxes are essential for Australia's future. Understanding that we are a community that prospers based on the strength of every business within the community, and on the relationships between businesses of all sizes is important.
Together, with the government and the community each doing its part, we can continue to ensure Australia's economy and the way of life of its people are the envy of the world.
We are looking to our politicians to take action across a number of policy fronts - to enable agile workplaces of the future, to create a globally competitive tax system, to ensure regulation isn't holding back productivity and innovation. But tax settings are critical, and they are a controllable factor we can change now.
So let's look at some facts around why improving the competitiveness of our business tax arrangements is important.
The net benefits of more competitive business taxes are permanent and significant
Some have argued that the benefits of proposed company tax cuts do not justify the estimated 10-year revenue cost of $50 billion, but they compare a cumulative ten-year cost with just one year of benefits. Or they compare net benefits with gross revenue costs, which is not meaningful.
Treasury's estimated benefit of 1 per cent of GDP (equivalent to $16 billion in today's economy) already includes the cost of a fully funded tax cut, as does the extra $4 billion of government revenue that flows from a bigger economy.
Moreover, once it kicks in it is a permanent uplift - year in year out GDP will be 1 per cent higher than otherwise.
The benefits of lower business taxes come from higher investment
The benefit of more competitive business taxes will come from businesses making decisions to invest
more. Treasury's modelling suggests you get a 2.6 per cent boost to investment over time.
Company taxes increase the required rate of return for investors to receive an adequate return after tax. The rate of return investors demand is largely set by returns available in global capital markets.
If companies do not deliver competitive returns to investors, investors will quite simply put their money somewhere else.
Increased business investment lifts real wages
The Treasury analysis of a cut in the company tax rate to 25 per cent finds that real wages increase by 1.2 per cent, or the equivalent of adding 100,000 full?time jobs paying average wages to the economy.
We also know that the United Kingdom have cut their rate from 28 per cent to 20 per cent since 2010 amongst a range of reforms and they appear to be reaping the rewards - a record of inward investment projects last year creating almost 85,000 new jobs.
More competitive business taxes boost national incomes
Treasury and Independent Economics find a positive boost to national incomes, so what of the claim
that despite increasing GDP and wages, reducing business taxes would actually detract from national
Such claims assume that investors will continue forever to accept lower after?tax returns from investing in Australia, rather than directing their investment to more competitive countries.
Foreign tax arrangements don't undermine benefits from lower Australian business taxes
There have been suggestions that due to the United States international tax laws, a reduced rate in Australia will simply see more top-up tax paid by Australian subsidiaries of US companies to the Internal Revenue Service in the US, delivering a revenue windfall for the US Government.
But the US only levies top?up taxes when Australian subsidiaries of US companies pay out profits as dividends, yet in practice much of the profits are retained right here in Australia, deferring tax payable in the US.
Is there a better alternative?
The criticisms levelled at proposed tax reforms do not seriously challenge the potential gains to be had nor do they provide alternatives to address the challenges confronting our economy.
Without a more competitive business environment how will we lift investment from its 50-year low, how will we fix the budget deficit without imposing a greater tax burden or relying on punitive spending cuts, and how will we support higher wages so our standard of living keeps pace with the world?
For more information:
Tony Melville, Head of Communications, Ai Group, Ph: 0419 190 347
Ari Sharp, Senior Manager, Media, ACCI, Ph: 0412 511 551
Christine Jackman, Director Communications (Media), BCA, Ph: 0417 986 108
Jonathan Hawkes, Director, Public Affairs, MCA, Ph: 0434 660 801