Company tax cut good for growth: miners

By Colin Brinsden, AAP Economics Correspondent
AAP
The Minerals Council of Australia says a cut in the company tax rate would promote economic growth.

The mining industry is backing the Business Council of Australia's call for a cut in the company tax rate to 25 per cent in the May 3 budget.

The Minerals Council of Australia says research by University of Calgary on international tax regimes recommends an Australian company tax rate cut from 30 per cent to 25 per cent, with an eventual lower rate of 20 per cent to match that of the UK.

"A reduction in Australia's uncompetitive company tax rate would primarily benefit wage earners and consumers, promote innovation and stimulate new foreign investment and economic growth," the council's chief executive Brendan Pearson said in a statement on Tuesday.

There has been speculation that Treasurer Scott Morrison will reduce the company tax rate to 28.5 per cent for all businesses, bringing it into line with the reduction that was introduced for small business in last year's budget.

However, polls show there is little support for such a cut among voters.

The Australia Institute says there is no historical evidence that a company tax rate cut in Australia or across the OECD will produce economic or wages growth, or lead to higher levels of employment.

The institute's executive director Ben Oquist says even a modest cut to 28.5 per cent would cost the budget $9 billion over the four-year estimates.

"In a budget-constrained environment it seems ridiculous to be proposing a $9 billion hit to revenue for a growth dividend that doesn't seem to be there," Mr Oquist told Sky News.