Swan flags short-term changes for business

4 Oct 2011, 4:37 pm   -   Source: AAP
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Federal Treasurer Wayne Swan has flagged changes to business taxation at the government's two-day tax forum in Canberra.

Federal Treasurer Wayne Swan has flagged changes to business taxation after listening to discussions at the government's tax forum, saying it demonstrated why the event was necessary.

Mr Swan didn't go into specifics.

But he told the 200 participants at the two-day forum in Canberra he was pleased with the talks so far.

"I think it's good to have a discussion about what we can do further to recognise, for example, that some businesses can't actually use their losses appropriately," he said on Tuesday.

"We may need to make some changes in that area."

The government was interested in following that up "because we understand what is happening to many businesses", the treasurer said.

Australian Chamber of Commerce and Industry chief executive, Peter Anderson, said it was a good suggestion as a short term measure that could help businesses in the "slower lane of the very uneven economy".

"But it's not a long term reform," he told Sky News, after addressing the first session of the forum on business taxation.

He said it was not something which, over the course of the cycle, was going to reduce the overall burden on business, because you are paying more in "profitable times".

Still, there was a more heated debate between business groups and trade union participants over whether there should be a cut to the 30 per cent corporate tax rate to 25 per cent, as recommended by the Henry Tax Review that was released in May 2010.

Australian Industry Group chief Heather Ridout, who was also a member of the Henry review panel, told the forum that business was frustrated the issue had not progressed.

"It is certainly an area that we will continue to advocate," she said.

But ACTU secretary Jeff Lawrence challenged business leaders to show how lowering the corporate tax rate would create more jobs in the economy rather than using the event as a vehicle for "self-serving business interests".

He said Australia's corporate tax was already lower than many countries, including the United States.

"We don't support, and this forum shouldn't support, Australia joining a race to the bottom on company tax," Mr Lawrence said.

The architect of the tax review, former Treasury secretary Ken Henry, said he didn't know if lowering company tax would create more jobs and reduce unemployment, but according "public finance theorists" both companies and workers would be winners from a corporate tax cut.

However, he conceded that from the mood in the room there was still a "long way" to go before a consensus could be reached between the differing groups.

"We need more discussion like this and only, I think, when we can get past these debates about business on the one hand versus labour on the other will we then be in a position to make sensible decisions on how we should tax," Dr Henry told the forum.

Mr Swan questioned whether the conversation should go beyond whether a tax rate cut.

"Should we think about, given the fact that there is enormous structural change, given the fact that the dollar is so high ... putting in place some business measures which reflect the pressure those businesses are under so that they can continue to employ and invest," Mr Swan said.

"I think everybody recognises that in the environment we are in, the structural change that we anticipated 18 months ago is far bigger than what anybody thought would happen at that time."

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