Many economists, including former treasury secretary Martin Parkinson, argue the lion's share of the benefit from lower company taxes flows directly to workers through higher wages and more jobs.

"The most important purpose of major tax reform is to encourage long-term economic growth that benefits all Australians," said Tom Seymour, the managing partner of PwC's Tax and Legal unit.

"One of the best levers as part of a package of reforms is to cut our high company tax rate to attract more capital, increase productivity and lift incomes, which in turn generates more government revenues."

$24b within a decade

PwC estimates the growth dividend from a 25 per cent corporate tax rate would generate $24 billion in income tax revenue by 2024-25.

Some of this would be offset by lower income from company taxes, which in turn would see a slight increase in the taxable income of individuals, who would receive smaller franking credits.

After accounting for these swings and roundabouts, PwC estimates that net income tax receipts would be $10 billion higher by the middle of the decade.


PwC's modelling, which is based on a landmark 2010 OECD analysis of the impact of lower taxes across its members, assumes the benefits build gradually over half a decade.

The push for a lower company tax rate, while politically challenging, would help address Australia's continuing slide in international competitiveness.

In 2001, Australia was ranked ninth in the developed world and below the OECD's unweighted average of 32.5 per cent. By 2008, the ranking had blown out to 21st and, at 30 per cent, remains well above the OECD average of 26.6 per cent.

The OECD average is heavily distorted by the fact that three of the world's largest economies, Japan, the US and Germany, have relatively high corporate tax rates. Exclude those and the average would be considerably lower.

The OECD modelling shows shifting 1 per cent of a country's revenue mix away from company tax can boost GDP by around 2 per cent per capita.

"Reducing the company tax rate is a carrot to entice jobs and investment to come to Australia," Mr Seymour said.