The Business Council of Australia (BCA) — representing Australia's largest 100 corporations — has called for a higher consumption tax and for the company tax to be halved. It did so in a submission to the federal government's review of taxation (the Henry review) made public on June 14
It comes as no surprise that the 100 richest corporations want company tax lowered.
In a stunning case of corporate spin, however, they attempted to dress-up their profit grab as a step to greater growth, prosperity and equity.
The BCA plan included calls to halve company tax to 15%, to cut income tax levied on savings (as opposed to wages and salaries), to raise consumption taxes (such as the GST) and to abolish some state taxes (such as payroll tax).
The BCA submission argued company taxes discourage investment. Company tax cuts — especially on overseas capital — will lead to higher corporate investment, it said.
However, it also said: "70% of corporate tax in fact ends up falling on workers, ultimately through lower wages, lower hours worked and loss of jobs. Consumers also feel the impact of higher corporate tax, through higher prices."
The BCA's claim, credited to unnamed US research, is bogus.
While higher corporate taxes certainly reduce profit, there is no direct link between profit and (productive) investment. Since the 1970s, more and more business investment has been put towards unproductive financial speculation — instead of into producing real goods and services.
This investment in "fictional" capital created few jobs and no new value. The global financial collapse since September shows how fragile this system is.
Even when company profit is invested "productively", its on the basis of profit, not human needs. The coal, petroleum and aluminium industries remain profitable, for instance, but they are job-poor and environmentally destructive.
Capital has no conscience. Raising the share of the economy controlled by big business simply increases their power to cut, consume and pollute.
There is no guarantee at all that lower company taxes will flow into higher employment or lower consumer costs. And the BCA's other proposal — to increase consumption taxes — means that consumers would pay more anyway.
It's a mark of the nature of the Rudd government that such a self-serving submission from Australia's richest could be given any consideration at all. However, the government has given the Henry review a brief to consider cutting corporate tax.
What the federal government presents as in the "national interest", the BCA knows, is actually in theirs.