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Trump tax cut a threat to investment: Joyce

October 19, 2017

Trump tax cut a threat to investment: Joyce

Annabel Hepworth, The Australian, 19 October 2017

Australia is falling behind as Donald Trump proposes to slash the US corporate tax rate, a threat to local investment, Qantas boss Alan Joyce has warned.

Mr Joyce, who is also on the board of the Business Council of Australia, pointed to warnings by the nation’s peak business group that the Trump administration’s plan would suck investment dollars away from places like Australia.

“Which is clearly what happens when you get huge differentials like this, because people will make decisions based on the returns that they are going to get and investment returns from US companies improves compared to Australia and Australian investments,” Mr Joyce told The Australian this week, during a flight taking Qantas’ first Dreamliner from Seattle to Sydney.

“And multinationals will make that decision. And that’s clear.

“I think everybody that is an economist, anybody that looks at it clearly knows they will make less capital investment in Australia if the differential continues.”

He said that different tax rates “make investors look at business cases differently”.

In the US, Mr Trump has announced plans to cut the federal rate from 35 per cent to 20 per cent.

The BCA has argued it is crucial to cut Australia’s company tax rate to attract foreign investment, although this was challenged this week by Reserve Bank assistant governor Luci Ellis, who said that if Australia could not attract foreign capital with its current environment the exchange rate would fall, making Australia more competitive.

Business has been pushing parliament to cut the company tax rate.

It has been citing Treasury estimates that cutting the company tax rate to 25 per cent would boost GDP by $17 billion a year.

Treasurer Scott Morrison has also pointed to the US plan to argue the case for tax reform.

Yesterday the House of Representatives was set to resume debate over extending company tax cuts to all companies. In March, the Senate agreed to gradually reduce the company tax rate for businesses to 25 per cent in 2026-27, but this was confined to businesses with a yearly turnover of up to $50 million.