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The Tax Institute calls for 2% cut to company to tax rate and action on state tax reform

Publication date: 10 Mar 14 | Source: THE TAX INSTITUTE

10 March 2014:   The Tax Institute has called on the Federal Government to cut the company tax rate by 2% and take a leadership role on State tax reform as part of its 2014-15 Federal budget submission, announced today.

According to the Institute’s submission, a cut in the company tax rate will deliver economy-wide benefits that are in the national interest, while reform of State taxes would create a more efficient tax system while boosting investment and growth. 

The Tax Institute’s President Michael Flynn said the overall message to Government was that despite Australia’s budgetary position, it is crucial the hard work on policy formulation that is required to improve the tax system is not delayed.

“The Tax Institute supports ongoing analysis of potential reforms to Australia’s tax system, which are consistent with the Henry Review platform.

“We welcome the announced Tax Reform White Paper consultation in the second half of calendar year 2014 and look forward to the Government setting a timetable for this consultation as soon as possible.

“The Government’s announced 1.5% company tax cut for the year ended 30 June 2016 is a step in the right direction, however, The Tax Institute encourages the Government to proceed with a 2% cut.

“A company tax cut would also reduce taxes on investment, driving an increase in savings and capital as well as innovation and entrepreneurship – all outcomes that are indisputably in the interests of all Australians.

“The Tax Institute urges the Government to take a leadership position on State tax reform and bring the States on board with a unified vision for tax reform in Australia. 

“This would include increasing Australia’s reliance on consumption taxes, such as the GST, and abolishing inefficient and complicated State taxes such as conveyance duties and insurance duties.

“Furthermore, the Government should consider the impact of such reforms on taxpayers in lower income tax brackets to ensure that such taxpayers do not suffer undue adverse consequences,” he said.

Other areas in need of reform highlighted in The Tax Institute’s submission include multinational taxation, tax transparency and alcohol tax reform.

Mr Flynn said, The Tax Institute welcomes the Government’s commitment to addressing base erosion and profit shifting (BEPS) in conjunction with Australia’s G20 partners through its endorsement of the OECD action plan on BEPS in July 2013.

“We support implementation of measures consistent with the OECD recommendations on BEPS, which are due to be released in September 2014, to ensure that multinational companies pay tax in the country where revenue is earned.

“The Tax Institute also calls on the Government to further analyse and investigate the merits of reforming the current system of taxing alcohol. 

“This would include evidence-based analysis, including consideration of transitional arrangements that might be required should a common volumetric tax be proposed,” he said.


The Tax Institute is the country’s leading educator and professional association in tax. Its 14,000 members include tax agents, accountants and lawyers as well as tax practitioners in corporations, government and academia.  The Tax Institute supports the tax profession through education and professional development and works to continually improve tax law and its administration.


For more information contact:

  • Stephanie Caredes, Tax Counsel, The Tax Institute, 0450 434 665

Dylan Malloch, Sefiani Communications Group: 02 8920 0700, 0407 620 613