The RBA says investment is low in advanced economies and it will be advances in technology, not lower taxes, that will drive increases in living standards
Lower tax in the corporate sector are not the ‘silver bullet’ that will slay Australia’s low-growth gremlins, the Reserve Bank says.
Deputy RBA governor Philip Lowe says lowering corporate tax rates to match other countries is not central to stimulating business activity.
‘I think probably at the margin you could argue that but I think it would be incorrect to focus on corporate taxation as the solution here,’ Mr Lowe told a House of Representatives economics committee hearing on Friday.
‘There isn’t a single solution, it’s working across a whole range of areas to create a pro-investment climate.’
Mr Lowe said investment is low in all the advanced economies and it would be advances in technology, not lower taxes, that will drive increases in living standards.
The Reserve Bank also commented on concerns about the possible dampening effects of income tax bracket creep on people’s incentive to work.
‘Australians have voted for the government to give them nice things but haven’t decided how they will be paid for,’ RBA governor Glenn Stevens says.
Mr Stevens told the House of Representatives economics committee the nation is yet to have a conversation about the right level of personal tax to pay for government services.
‘We’ve all voted as voters for the government to give us good things. We have not actually voted for the funding,’ Mr Stevens said.
He said the funding gap was not ‘disastrous’ and ‘we’re not heading to hell any time soon’ but the nation’s political leaders had to engage with the community about the appropriate level of tax relief average income earners could expect.
AAP
