May 25, 2018

Company tax cut lessons from … Australia

The handing of hundreds of millions of dollars in tax cuts to TV networks hasn't quite produced the kinds of results claimed for company tax cuts.

Glenn Dyer and Bernard Keane

Crikey business and media commentator / Politics editor

We have been reporting for some time the US experience of company tax cuts, which regular readers can now recite by rote -- share buybacks, etc, etc. But what if we had some contemporary Australian experience?

Fortunately, the government has handed one industry a big tax windfall in recent years, so we can check out the extra investment and wages growth that has flowed from it. Since 2010, both Labor and the Coalition have handed the commercial television networks what will total millions of dollars via cuts to licence fees. Labor halved the licence fees, and they've since been cut back and then abolished altogether by the Coalition (the fees were cut a further quarter in the 2016-17 budget; now they're gone altogether, replaced by the spectrum fee). The total net cost since 2010 has been several hundred million dollars; even the abolition of the heavily reduced fee last year cost the budget $400 million.

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One thought on “Company tax cut lessons from … Australia

  1. Phen

    Sorry, but this is pretty poor analysis. Effectively, the fee reductions were an acknowledgement that the old business model was becoming increasingly unprofitable and hence ongoing substantial charges weren’t sustainable. The fact that the fee reductions didn’t actually solve the underlying problems with the business model tells us approximately nothing about the impacts of tax cuts on the broader economy – other than that they wont save businesses which are already going down the gurgler.

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