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Productivity Commission Proposes 20% Company Tax Rate and 5% Net Cashflow Tax

Treasurer Jim Chalmers has embraced the recommendations to set the agenda for a three-day economic reform summit in mid-August.

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Overview

  • The interim report calls for cutting the company tax rate to 20% for businesses with annual turnover below $1 billion.
  • A 5% net cashflow tax would allow firms to immediately deduct the full value of new investments and capture untaxed profits of some multinationals.
  • Productivity Commission modelling finds the revenue-neutral package could lift GDP by about A$14 billion and spur A$8 billion in additional investment.
  • The report urges a regulatory overhaul, proposing an independent statutory commissioner and expanded parliamentary scrutiny to trim red tape.
  • The recommendations will form the core agenda for Jim Chalmers’s August 18–21 economic reform roundtable with business, unions and policy experts.