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The Australian Chamber of Commerce and Industry (ACCI) has slammed company tax changes proposed by the federal Labor Party, saying they could damage investment and lead to fewer job opportunities.
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ACCI hits out at Labor's tax proposal
03 March 2015
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The Labor Party has proposed tax reform based around four key pillars:
Worldwide Gearing Ratio: where tax deductions would be based on a company’s entire global operations, not just what they do in Australia;
Hybrid Mismatches: where tax laws would be standardised with other countries so that companies cannot ‘double-dip’;
Increased ATO Compliance: where the ATO would be provided with "effective funding" to improve its compliance capabilities; and
Third-party Data Matching – Early Start Date: where third-party reporting and data matching would be started early to improve compliance.
In response, ACCI chief executive Kate Carnell said the proposed tax changes could make Australia a less attractive place for international investment, thereby pushing new projects offshore and hurting jobs.
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“Any changes to Australia’s international tax rules must be made in cooperation with our OECD partners and be part of the wider tax white paper process. Otherwise we run the risk of undermining investment and worsening unemployment," Ms Carnell said.
“Recently there have been major changes to thin capitalisation rules and now is not the time for unilateral action. Business needs greater consistency and certainty in our tax laws if Australia is to remain an attractive place to invest and do business.”
John Osborn, the ACCI's director of economics and industry policy, said the ACCI agrees that all businesses need to pay their fair share of tax, and it should be paid in the country in which profits are made, but said that Labor’s proposal was not the best option.
"That’s why we support the government’s efforts through the G20 to address the issue of base erosion and profit shifting. But we need to be careful we don’t reach for blunt solutions that end up doing more harm than good," Mr Osborn said.
“A lot more thought needs to go into the proposed worldwide gearing ratio to ensure that legitimate activities overseas don’t have negative consequences for operations in Australia. It is not yet clear that Labor’s proposal does this."
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