MEDIA RELEASE: Fans of GST hike ignore KPMG data on company and personal taxes

While there has been a strong focus on KPMG’s international comparison of GST rates, media reports have conveniently ignored the report’s figures on company and personal tax, says economics researcher Michael Potter.

A Research Fellow at the Centre for Independent Studies, Mr Potter points out that the KPMG global tax survey report — based on information from 145 countries — argues for reductions in Australia’s company and personal income taxes. However, “quoted ‘tax experts’ have downplayed these findings and looked largely at the comparison of indirect taxes, such as the GST.”

“KPMG’s report does find that Australia’s GST rate of 10% is below the global average of 15.8%. But it also argues that our company tax rate of 30% is above the global average of 23.7% and the personal income tax rate of 45% is above the average of 41.4%. Those citing the report to push for a rise in GST can’t have it both ways.

“If our GST is increased to reach the global average, we also must cut our company and personal tax rates.”

Mr Potter notes that the report also outlines that most developed countries have decreased their company tax rates over the past year.

“Regardless, this is a false debate. Australia doesn’t ‘compete’ with other countries over our GST rate. We aren’t uncompetitive because our GST rate is too low and businesses generally don’t move countries because of the GST rate,” he says

“However, Australia does compete for global capital. Our company tax rate is harming our ability to attract capital – the KPMG study just confirms what is already known.”

Michael Potter is a Research Fellow at the Centre for Independent Studies