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13 Dec 06 Treasurer attacks BCA's international company tax comparisons

In a press release issued on 12 December 2006, the Treasurer, Peter Costello, said that the Report by the Business Council of Australia - Corporate Taxation: An International Comparison - 2006 Update - contains misleading claims about Australia’s corporate tax levels.

The Report, prepared in conjunction with KPMG, found Australia’s corporate tax burden has risen to 5.7% of GDP, up from 5.1% a year ago, more than double that of the United States and almost double the level in the United Kingdom.

The Treasurer said: "The BCA bases its claim that Australia’s tax burden is internationally high on the measure of company tax collections to GDP.  As company tax is levied on profits, this approach perversely rates countries with more profitable corporate sectors as less internationally competitive...The BCA notes that company taxes as a proportion of GDP have grown from 4.8% to 5.7% from 1999-2000 to 2004-05.  But all of this growth in company taxes is explained by growth in profitability rather than any tax increases – profits have gone up by 69% over this period while company taxes have increased by 65%.  If corporate profitability were still at the level of 1999-2000, the corporate tax to GDP ratio in 2004-05 would be 4.7% rather than 5.7% (as measured by the OECD and BCA).  The increase in corporate tax has come entirely from increased profitability, not tax increases."

For a copy of the BCA Report, go here and follow the link

For a copy of the Treasurer's press release, No 2006/133, 12 December 2006, go here

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