There’s strong economic evidence of the benefits of company tax cuts, although opposition leader Bill Shorten has so far resisted supporting changes through the Senate. Photo: Attila Csaszar

Tax changes key to investment flow

Lower company tax rates and changes to power pricing are among possible moves that would support the state’s economic development, according to local academic Peter Hartley.


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Thank you for this article, would Professor Hartley provide some published academic research to support his claims. Economist Paul Krugman recently wrote a detailed article, arguing the exact opposite.

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Thanks for taking the time to get in touch Gitte. There's a pretty strong economic consensus on this topic. Treasury published a paper on it recently, a company tax cut was recommended in the Henry Tax Review, PwC and KPMG have also published papers on it. Peer reviewed academic studies linking company tax cuts and wage growth include Hasset & Mather (2006), Arulampalam, Devereux and Maffini (2008), Felix (2007), Carroll (2009). Ignoring wages, for a moment, an interesting point that Krugman makes is that lower tax rates lead to profit shifting, and consequently more revenue in the budget. Note also that even he does not deny that it will improve wages, just that it will take some time. Let's consider that big benefit for the next generation.

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