Mathias Cormann (WA, Liberal Party, Minister for Finance) Share this | Hansard source

(—) (): I'm not familiar with the specific analysis that the good senator is referencing, but what I would say to you is that, in January this year, the corporate tax rate in the United States went from 35 per cent to 21 per cent. In Australia, for businesses above $50 million in turnover, it is locked in at 30 per cent. We now have the second-highest corporate tax rate in the OECD.

When you compare the Australian economy with the US economy, we actually are so much more in need of a competitive business tax rate than the United States. That is because the United States has a much bigger domestic market, so they've got a much bigger domestic consumer market, and they also have much easier access to a stronger, bigger domestic capital market. Australia is a relatively small economy in a global context. We have a small population. We have a very capital intensive economy. We rely on attracting foreign investment in order to continue to develop our economy to its best potential. And do you know what? The United States is our biggest source of foreign direct investment. An investor will now look at the corporate tax rate of 21 per cent in the United States, they'll look at the corporate tax rate of 30 per cent in Australia, and you know what they'll say: 'We have a better opportunity to get a higher after-tax return on our investment in the United States than in Australia.' So more investment will be diverted away from Australia and to the US and other countries around the world.

Whatever you say about the other tax settings in the US, you can't dispute the fact that the Trump administration legislated a reduction in the corporate tax rate from 35 per cent to 21 per cent—that is an absolute fact—just as you can't argue with the proposition that, in France, a centre-left leader has legislated to progressively bring the corporate tax rate of 33 per cent down to 25 per cent. (Time expired)