Corporate Taxes contd.

The world waits for no one.

It seems real-time events were too fast for me. For the last few weeks, I was researching and writing a blog on the global trend (specifically, the US, the UK and Australia) of decreasing company tax rates (and my corresponding recommendations), which I managed to upload today. Two days earlier though, the Australian government had already managed to pass their intended tax cuts. I need to be faster with my blogging!

On the plus side though, Australia’s decision is somewhat consistent with my recommendations.

Company tax cuts could represent effective fiscal stimulus to currently sub-trend investment rates across the advanced world (especially in light of recent global protectionist rhetoric). And while I was concerned that such a trend could degenerate into a mutually-destructive international price war, and I did have a preference for governments around the world to make the first move in terms of their own public infrastructure investment, rather than immediately outsourcing to the private sector via company tax rate cuts, Australia’s decision does focus its tax cuts on smaller businesses. Specifically, businesses with a turnover under $10 million will receive an immediate 2.5% cut (from 30% to 27.5%), extending to businesses up to $25 million by July 1, and businesses under $50 million in financial year 2018/19, before dropping the rate to 25% for all businesses under $50 million over the next 10 years.

This should address some of my concerns that corporate tax cuts would worsen income inequality by favouring large companies.

But there is still a desire in the government to expand these tax cuts to all companies which Australia, while risking a worsening of income inequality, may be forced to do if other countries are doing the same thing, forcing Australia to follow suit just to maintain its share of global investment, even if not stimulating it per se.

Time will tell – I’ll just have to keep up to speed.