Contact: Melinda Loew
Deloitte
Media and Communications
02 9322 7146

Canberra’s increasing reliance on corporate Australia for its total tax take demonstrates it is still not taking business tax reform and international competitiveness seriously, according to Deloitte tax policy partner Miquel Timmers.

“The Federal Government has become over-reliant on corporate Australia to fund strong budget surpluses.  In 2004-05 the Government collected 23% of the total federal tax revenues from corporate Australia.  This is set to increase to 27% in 2006-07, representing an increase of $15 billion.

“The recent Warburton-Hendy international comparison of Australia’s tax system to the OECD weighted average of 2.6% of gross domestic product (GDP) showed Australia’s corporates are taxed at double the OECD. 

“In 2009/10 the corporate tax take will rise to $66 billion; equal to 5.7% of GDP.  This means that corporate Australia’s tax liabilities will exceed the OECD weighted average by a massive $36 billion in only four years time.

“This Budget has failed to adopt a number of key observations arising from the international comparison.  For example, Australia does not allow tax deductions for acquired business goodwill, and lags behind best practice in the recognition of business losses.

The improvements to depreciation deductions for investment in new plant and equipment announced in the Budget will be welcomed by business.  However, if the Government is serious about making Australia’s corporate taxes internationally competitive, it must adopt far reaching reforms in future Budgets in line with key OECD competitors,” he finished.