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Industry Group calls for review of company tax

08-07-2010
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The Federal Government decision not to cut company tax from 30 to 28 per cent is deeply disappointing, says Australian Industry Group Chief Executive Heather Ridout.

Also, the retention of the proposed superannuation guarantee increase would leave business with a “very big bill," she said.

The Government back down follows a compromise deal on the Minerals Resource Rent Tax announced recently by Prime Minister Julia Gillard. 

"It is also disappointing to see the apparent dropping of the aspiration to reduce the company tax rate to 25 per cent as recommended by the Henry Review and supported by Ai Group, Ms Ridout said.  

“This Henry Review proposal was not simply about tax cuts – it was part of a tax reform to make our economy more competitive, Ms Ridout said. 

“The outlook for Australian businesses is for an already uncompetitive company tax rate to become even less attractive. This is a blow for businesses in sectors such as manufacturing that need a boost to their ability to attract mobile investment.

"The decision to proceed with the plan to compel businesses of all sizes to raise their contributions to superannuation on behalf of employees from 9 per to 12 per cent leaves business with a very big bill – one that will now not be compensated through the improvement to the company tax rate. 

"This makes it even more imperative that a systematic trade-off be implemented to offset the superannuation guarantee (SG) increase. This would require Fair Work Australia to discount its minimum wage increases to reflect SG increases and for the Fair Work Act to be amended to require bargaining representatives to take into account SG increases that employers will be required to pay.”

"The Government’s decision to continue with the partial implementation of the Henry Review recommendations in relation to small business, which was also advocated by Ai Group, is a positive development that will provide important cash flow benefits and cut compliance costs for smaller businesses.  While it is a welcome reform there is clearly more work to do in this area."

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