Gillard still pushing for company tax cut, but business groups want action

Business and tax experts have acknowledged Prime Minister Julia Gillard’s promise that the corporate tax rate is now back on the table, but they’ve taken the announcement with a grain of salt.

CPA Australia policy head Paul Drum told SmartCompany this morning the organisation doesn’t have a lot of confidence the measure can ever pass through Parliament.

“Our view is the company tax rate should be set at 25% to maintain our competitiveness, and we’re not particularly encouraged by the fact the government is saying it’s back on the agenda,” he says.

“I think our view is that the politics needs to be removed, and if we’re going to do this, we need to genuinely commit to getting our tax down.”

The Business Council of Australia has made the same comment, saying in a statement that while Gillard’s announcement is “welcome”, it won’t stand for much if the tax cut isn’t part of a broader tax reform “that delivers a net benefit to businesses right across the economy”.

”We’ve heard you loud and clear on the company tax rate,” she said yesterday. ”We see it as the priority for the next step in tax reform.”

”We’re in the cart for a lower company tax rate but it has to be affordable. And that means it has to be funded by other changes in the business tax system.”

Business has rejected this wholeheartedly. The Business Council says, instead, this needs to be financed through spending cuts, while the Australian Chamber of Commerce and Industry has also reportedly said the tax cut needs to be funded through spending cuts as well.

Opposition Leader Tony Abbott has also attacked the announcement.

”What Julia Gillard has announced is that there will never be a company tax cut unless it is funded by a tax increase. That is not a tax cut, that’s a tax con – and the Australian people and business community will see right through it,” he told Fairfax.

Drum says it’s understandable why the government can’t pass the tax cut, given the hung Parliament and the fact the Greens control the Senate. But he says floating the issue again doesn’t fill him with confidence.

“It seems unlikely that it will happen. To put it there as a carrot doesn’t instil me with confidence that it will happen.”