Companies

Oct 25, 2012

Forget business tax cuts, focus on electricity reform

While attempts to wangle a cut to business tax rates fail, there's more to gain from repairing our energy regulation framework instead, write Bernard Keane and Glenn Dyer.

The failure of the Business Tax Working Group to recommend a revenue-neutral way to lower the corporate tax rate hasn’t surprised too many people: it was always going to be hard to identify a way to broaden the tax base sufficiently in a way that ensured a small number of losers and sufficient winners. But another reason why the working group threw the towel in is worth noting:

“The economic benefits from a reduction in the company tax rate from the current rate are likely to be smaller than when the rate was much higher in the 1980s and 1990s, notwithstanding that capital may have become more mobile since then. The working group considers that a cut of two to three percentage points would be required to drive a significant investment response.”

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16 comments

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16 thoughts on “Forget business tax cuts, focus on electricity reform

  1. Jimmy

    This is a very good article but once again let down by this tripe “If an incoming Coalition government is serious about reform it should prioritise the wholesale rewriting of the regulatory regime covering electricity, gas, water and other natural monopolies in this country” Why is it constantly assumed that the coalition has won the next election? It is this sort of reporting that has seriously reduced the quality of political journalism.

    To me the govt now has significant information to reform in the electricity sector is required and should develop a policy over the next 6-9 motnhs to take to the election (qassuming it couldn’t get it through before then.)

  2. Jimmy

    This is a very good article but once again let down by this tripe “If an incoming Coal ition government is serious about reform it should prioritise the wholesale rewriting of the regulatory regime covering electricity, gas, water and other natural monopol ies in this country” Why is it constantly assumed that the coalition has won the next election? It is this sort of reporting that has seriously reduced the quality of political journalism.

    To me the govt now has significant information to reform in the electricity sector is required and should develop a policy over the next 6-9 motnhs to take to the election (qassuming it couldn’t get it through before then.)

  3. paddy

    I’m with Jimmy on this one. The so called “inevitability” of a coalition victory at the next election seems to be getting less likely by the week.
    Plus, the chances of that bunch of time serving hacks who make up the opp front bench, actually managing to institute meaningful reform….. Fanciful nonsense.

  4. Jimmy

    Paddy – “Plus, the chances of that bunch of time serving hacks who make up the opp front bench, actually managing to institute meaningful reform….. Fanciful nonsense.” Recent history would be with you on that Paddy, what reforms did the Howard got achieve, the GST and what in 11 years? The Gillard/Rudd and the Keating/Hawke govt achieved much more.

  5. Edward James

    Government was once our energy supplier, at a break even arrangement with taxpayers. We put them in charge/let them take control of our resources like coal water and gas. They in the greed not wisdom privatised what we the peoples had put in place. They did what they are still doing. Selling our country and its resources out from under us. all the time borrowing in our names amounts of money we can never hope to pay back. almost everything which happens in the way of business has interest on borrowings tied into it even our sovereign activities are being financed with borrowings. I am dead against this abuse of the peoples trust! Edward James

  6. Jimmy

    Edward James – Nice rant but what is your point? Should we outlaw borrowings? Should energy companies wholly owned state assets (despite all evidence that the reverse is true)?

  7. Edward James

    I thought my rant was clear enough Jimmy We the people once owned coal and energy infrastructure. Energy was supplied to us on a break even basis on infrastructure whic taxpayers paid to put in place. Both Labor and Liberal Coalition put in place with their regulation of the Electricity Supply Act in March 1999 the legal stepping stones to assist them in privatising the supply of our energy. Now the rise in cost to consumers is distanced from government. Any talk of government controlling the rising cost is as mythological as government controlling the price of our petrol. why wen we turned up here in Australia and took over from those who were already here, would responsible government sell off our so called sovereign resources? Edward James

  8. Edward James

    While I would not go so far as to outlaw Jimmy I do question the Federal and State government borrowing against the peoples capacity to keep up with the interest rates on already OTT borrowings made against our perceived capacity to pay. I believe the interest attracted by almost everything we do will be our eventual fiscal doom. i certainly believe peoples have exchanged the iron chains of slavery around our necks, for an almost invisible chain of debt, draped around our shoulders by those very people whom we have given our votes to in trust. Edward James

  9. MJPC

    I am with Jimmy and Paddy on this. Why would an incoming coalition government (which is also a non possibility) address this inequity when they are quite prepared to lie at every turn in blaming the carbon tax for any price rises in energy.
    As for the NSW Government and Port Botany, we already have reports that if the sale progresses the price of fuel stored on site will escalate for the consumer.
    Of course we have trite promises from the O’Farrell government legislation will be in place to stop gouging but facts stand that when public utilities are sold to their mates, it is usually at too high a price then the ever suffering public pay the cost with the pollies bleating “how horrible” or “we can’t do anything” (i.e Sydney Airport costs), yet they have ensured a monopoly has been achieved.
    The current Feds need to act on the electricity now.

  10. Jimmy

    Edward James – NSW, Qld and WA still have state owned energy assets yet their prices are rising more than Victoria’s privately owned industry so govt ownership clearly isn’t the answer.
    And if you expect these govt to simply not make a profit on these energy assets (as you attest once happenned) would you instead pay higher taxes to cover the shortfall in revenue or make do with fewer services?

    And you post dealing with borrowings is just nonsensical ramblings.

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