Joel Fitzgibbon (Hunter, Australian Labor Party, Shadow Assistant Treasurer and Revenue) Share this | Hansard source

I thank the parliamentary secretary for giving us the opportunity to put some questions to him. I am very interested in some of the forecasts on which the budget is based. In particular, I am interested in this new concept of receipts from companies rising more quickly than company profits. This is partly a function of the resources boom, of course. I might know the answer to this question myself—I think the answer to the question may be the extent to which mining companies, in particular, have been investing happily in new capacity and therefore bringing forward newer and larger deductions—but it is of concern to the opposition that the budget forecast seemed to be largely underpinned by the concept that receipts from company taxes are growing faster than company profits are.

I want to put a few questions to the parliamentary secretary. The first is: does he accept that, based on the budget, company tax is growing faster than company profits? From an independent observer’s view, having company taxes increase more rapidly than company profits seems unsustainable. On what basis does the Treasury believe this can be sustained over the forward estimates period? Is it assumed that the average company tax rate will fall again over the forward estimates?

The effective company tax rate must be rising if company profits are growing slower than the company tax. For current trends to be sustained, is there not effectively an assumption that the effective company rate is increasing and has been, in recent years, approaching the company tax rate itself? Is this the assumption Treasury is using and, if so, on what basis? And is Treasury assuming that the level of deductibility is very low for the additional component on company taxable income that is a basis of the above trend?

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