The business lobby could never be accused of lacking persistence.

I note further calls from the Business Council for corporate tax cuts based on a recent visit to the US by the Council’s CEO and meetings held there with, among others, business leaders and fellow lobbyists who reportedly advised that there was no major domestic US opposition to such action as an integral element in President Trump’s taxation reform proposals. Quelle surprise!

This feeds into the argument that in light of this prospective US action similar moves must be made in Australia so as not to suffer a lack of competitiveness in attracting capital investment. Consistent with previous similar calls for action in this country there is little or no attempt to justify this assertion by assessment of the differing circumstances in both countries in their respective tax system or capital formation and attraction experience. This ‘we must avoid the resulting reduction in competitiveness’ proposition is simply put and has increasingly assumed the status among its adherents of incontrovertibility.

Well, here’s an idea…

Let’s adopt the Council’s (and by extension the Federal Government’s) argument and reduce corporate tax rates to a level that would be inarguably competitive, say 10% for all companies.

At the same time, however, let’s repeal all allowable deductions to be set against corporate taxable income except for those that are directly attributable to the generation of that taxable income; payments of salary and wages to employees engaged in producing a company’s income would be a good example of a continuing allowable deduction.

On the other hand, donations to political parties, as an example, would no longer be an allowable deduction. Happily this would kill two birds with the one stone – remove a deduction that almost never is essential to producing a company’s income and at the same time achieve the desirable elimination of corporate donations to political parties, which many would claim to be a source of potential perverse harm in our democracy.

It cannot be beyond the wit of our Government leaders and senior bureaucrats to develop a code of allowable deductions under this changed system and administer it fairly. Adoption of this idea would also remove one of the major objections to the ongoing call by the business sector for reductions in the rate of taxation applied to their operation – the fact that already very many Australian corporates in any case do not pay taxes at anywhere near the currently applicable rate!