Australian tax picture more complex than just company and personal tax rates

Comments on Michael Stutchbury “A capital idea to cut company tax”, 16/06/2009, http://www.theaustralian.news.com.au/story/0,25197,25641251-5017771,00.html

Company tax, like income tax, can be a complex concept. I don't think 30% of company tax rate is a true reflection of company tax burden in Australia. Nor do I think the nominal company tax rates in most other countries are either.

For example, besides the 30% income company tax rate, we have also payroll tax of varying rates at least for large firms in every State, and superannuation guarantee contribution of 9%. They may not all tax on company earnings per se, but some of that belongs to company tax burden and some of that a tax on labour.

So it is overly simplistic to just quote and compare the nominal company tax rates across countries. Any conclusions drawn from that are misleading and will not inform the public on the true burden of tax on capital versus labour.

Further, there is dividend imputation in Australia. It is discriminative against foreign capitals, but has the advantages to encourage domestic investment.