CANBERRA (Reuters) - Australia’s conservative opposition promised on Wednesday to cut the country’s 30 percent company tax rate if it wins September elections, saying the move would boost business confidence and help support flagging economic growth.
The conservatives, leading in opinion polls in an election race centered on jobs and management of the $1.5 trillion economy, said it would cut 1.5 percentage points off the tax, helping defray the cost of a new paid parental leave scheme for about 3,000 of the country’s biggest companies.
“It gives business that certainty, that stability, that they are crying out for, which means they will have confidence in creating jobs and having a go trying to grow the economy,” opposition Treasury spokesman Joe Hockey told local television.
The Labor government this month shaved economic growth and revenue forecasts ahead of the September 7 poll, blaming the end of a China-fuelled mining boom.
It expected economic growth to slow to 2.5 percent this fiscal year, down from a previously forecast 2.75 percent, while revenue forecasts were lowered by A$33 billion over four years, including a A$9.7 billion slump in company tax receipts.
The conservative tax promise, likely to be one of the election campaign’s biggest pledges, would cost the budget $5 billion over the next four years and $2.5 billion a year after that, according to local newspapers.
The cut would take effect from July 1, 2015, coinciding with introduction of a parental leave scheme the conservatives plan to impose on the country’s biggest businesses and costing around A$4.3 billion a year.
At 30 per cent, Australia’s company tax rate sits about six percentage points above the average of most developed economies and business groups have been urging a reduction to help boost international competitiveness and investment.
Prime Minister Kevin Rudd’s Labor, trailing by 48 percent to 52 percent in the latest opinion polls, previously pared back promised company tax cuts after a controversial mining profits tax failed to raise enough revenue to fund the measure.
Reporting by Rob Taylor; Editing by Richard Pullin