BCA calls for tax cuts and fiscal discipline in budget

On Monday (4 May), the Business Council of Australia (BCA) called on the government to deliver a “disciplined” budget on 12 May to help the economy weather geopolitical turbulence and attract international investment.

The business lobby said that lower taxes, spending restraint and regulatory reductions would make Australia’s economy more resilient and competitive amidst a volatile geopolitical environment.

“When global shocks hit, Australians pay higher prices through household bills and everyday costs, so it’s vital we control what we can control and ease pressure on households through new productivity measures,” BCA chief executive Bran Black said.

“This Budget should include reduced spending to curb inflation, significant reductions in red tape, and tax changes which drive investment and lift living standards.”

On the tax side, the BCA urged the government to reject the Productivity Commission’s proposed net cash flow tax, as well as the 25 per cent gas export tax that cross-bench politicians have been agitating for.

It argued that taxes targeting the operation of businesses in Australia would simply make consumers pay more.

To make Australia’s business tax settings more competitive, the BCA suggested the government could implement an investment allowance or immediate expensing for businesses. It also called for a simplified R&D tax incentive, a move the group said would lift business innovation.

It added that the R&D tax incentive expenditure threshold should be abolished, or lifted to $250 million.

The pre-budget submission also called for stronger fiscal discipline, including a 2 per cent annual cap on real spending growth. It added that the tax-to-GDP ratio should be capped, and off-budget investments should be subject to an independent cost-benefit analysis.

The latter is a growing cost base that economists have previously raised concerns about, with AMP chief economist Shane Oliver warning it was “making a mockery of budget transparency.”

On regulation, the BCA encouraged the government to undertake a red tape stocktake, aiming to achieve a 25 per cent reduction in regulatory costs by 2030. It said this would ease the cost of doing business and enable savings to be passed on to consumers.

Black said it was imperative that Australia improve its performance in attracting global investment, noting that the BCA’s Global Investment Competitiveness Index ranked Australia 21st out of 41 countries.

“Countries are working harder than ever to win investment, and when it goes elsewhere, it takes Australian jobs, wages and opportunities with it,” he said.