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Senate block to tax plan – Ai Group comment

"It is a worrying sign of a lack of sensible policy debate that the Senate today appears unlikely to support the remainder of the Government's Enterprise Tax Plan and that its detractors continue to overlook the favourable impacts that passage would have on investment decisions, economic activity and job creation in both large and smaller businesses," Innes Willox, Australian Industry Group Chief Executive, said today.

"If the remaining program of tax cuts was passed by the Senate, businesses would immediately view decisions about investments in medium and longer-lived assets more favourably because the future income associated with those assets would be subject to a lower company tax rate. The additional investment given the nod in these circumstances would bring benefits immediately across the economy with a myriad of extra opportunities for small and medium enterprises linked directly to the new investments themselves and to the associated extra activity.

"Even though the tax cuts will apply to income earned in future years, they will bring forward investment in medium and longer-lived assets from the get go and the economy-wide benefits will start to flow as soon as the legislation is enacted.

"If the remainder of the Enterprise Tax Plan is not passed we will be stuck with an uncompetitive and unnecessarily complex two-tiered company tax system," Mr Willox said.

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