25 Oct 12 Business Tax Working Group - Draft Final Report released but no recommendations
On 24 October 2012, the Business Tax Working Group (Working Group) released its draft final report as foreshadowed in its consultation guide and recent discussion paper.
The Working Group was established following the Tax Forum in October 2011. The Government asked the Working Group to prioritise consideration of a cut to the company tax rate accompanied by measures that fully offset the cost. The Working Group released a Discussion Paper in August 2012 that sought views from stakeholders about some specific base broadening options to offset the cost to revenue of a cut to the company tax rate.
Following the release of the Discussion Paper, the Working Group met with 20 stakeholder groups and received more than 80 written submissions.
The Working Group received feedback from many individual businesses asserting that they would be worse off as a result of the trade-offs canvassed in the Discussion Paper. Further, some submissions questioned whether there would be a net benefit for the economy as a whole from a combination of some of the base broadening measures canvassed and a cut in the company tax rate of between one and three percentage points. Overall, the Working Group has found there is a lack of agreement in the business community to make such a trade-off.
The Working Group has therefore made a number of findings but is unable to recommend a revenue neutral package to lower the company tax rate.
As the draft final report does not include any recommendations, the Working Group will not be seeking written submissions in response to the draft final report or holding a further round of consultation meetings with stakeholders.
The Working Group intends to shortly submit its final report to the Deputy Prime Minister and Treasurer.