Council chief warns Australia will be left behind as other countries slash their rates to ‘improve competitiveness’

Australia risks claiming the third highest company tax rate in the OECD if the Turnbull government fails in its bid to shift the top tax rate from 30%, the Business Council of Australia has warned.

As Scott Morrison attempts to shift focus back to the economy and the government’s moves to reform the nation’s tax system, the BCA has upped its advocacy for change, cautioning that moves by the US, the UK and France to drop their tax rates spelled bad news for Australia when it came to investment and competitiveness.

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“As other countries have slashed their company tax rates to improve competitiveness, Australia has been left to languish with a rate that has been unchanged for 16 years,” BCA chief Jennifer Westacott said in a statement.

“The average company tax rate across the OECD is 24% and falling. The average across Asia is 21%,” she said.

“Australia currently has the fifth highest company tax rate in the OECD and it will be third highest once the USA and France deliver on their pledges to slash their company tax rates.

“This global action should be a wake up call for the Senate that Australia can not afford to stand still, since every company tax reduction overseas is a de facto tax increase on Australia.”

The Turnbull government proposed a 10-year reduction in company tax cuts, but so far, all those other than cuts for small businesses, have stalled in the Senate.

Labor, which has previously supported company tax cuts, has so far stood against the government plan.

However Westacott said even the government plan did not go far enough.

“The proposal currently before the parliament to lower the rate to 25%, will take a decade to be phased in, and will still leave Australian above the OECD average and significantly higher than other countries with whom we compete for investment and jobs,” she said.

“Australia needs a pro-growth, competitive tax system for all businesses, big and small, to stimulate investment, raise productivity and increase the real wages of working Australians.”

The business chief said companies which weren’t thriving “can’t create jobs and can’t give workers a pay rise”.

Labor unveiled its plan to create a $1bn Australian manufacturing future fund on Saturday, as it seeks to counter attacks it is anti-business.

It’s scheme, which was modelled on the Clean Energy Finance Corporation, would see manufacturers granted cheaper access to finance and loan guarantees in order to increase investment and growth.

Late last month, Morrison warned Australia risked becoming stranded on a “tax island” if it did not act to address its company tax rate, indicating his intentions to place tax reform squarely back on the agenda.

“I mean, Donald Trump has laid down the challenge,” he said at the time.

“The world is moving to lower taxes on corporate investment all around the world. And if you get out of step with that, the money will go elsewhere and so will the jobs.

“So, my message to Bill Shorten is to wake up to himself and understand that what he is doing is he is standing between Australians and their jobs by not supporting our enterprise tax plan that will put more people in work and deliver more and better paid jobs.”