JUST two months ago Malcolm Turnbull came within a whisker of winning parliament’s approval for his most cherished policy: cutting the corporate tax rate from 30% to 25% over ten years. At the last minute he failed to secure a couple of votes in the Senate, where his conservative government lacks a majority. Undeterred, on May 8th the prime minister made tax cuts the centrepiece of his government’s budget for the coming fiscal year. As well as lowering rates for business, it also included cuts in personal income tax. Mr Turnbull, whose government has long trailed Labor, the main opposition, in opinion polls, hopes his tax strategy will reverse his fortunes at a federal election due next year.
Among rich countries, Australia has lagged in cutting corporate taxes. It last did so 17 years ago. The Business Council of Australia, a lobby group, complains that the rate is “frozen in time” compared with the American one of 21%, which is also the average in Asia. The Treasury worries that...Continue reading
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