1. Corporate taxes in Australian context Australia’s economy is “hot, wet and heavy” (Charles Berger) One result is heavy dependence of public revenue on commodity cycle Therefore volatile company tax collections fallen $10 billion or 15% in one year compared with $3 billion or 2% fall in individual income tax

2. Corporate tax rate in context Factors in investment decisions institutions – legal, regulatory, speed of decision-making, freedom from corruption stability in regulations local market language, culture, living conditions for executives costs and access to resources skilled labour reliable infrastructure – electricity, transport, communication financial imposts non-tax imposts – health insurance (USA), workers compensation insurance taxes taxes on factor inputs – customs duty, payroll tax, local government taxes transaction taxes – stamp duty company tax – and only when firm is profitable

3. In defence of imputation Small savers historically have gone for poor performance investments – bank deposits, fixed interest equities were for the well-off who could use companies, trusts etc Imputation encourages all to invest in high quality investments democratization of shareholding since imputation, both through direct holdings and superannuation Also imputation encourages firms to distribute profits, leading to better capital allocation Should be seen as removal of double taxation

4. In defence of indexation Ralph “reforms” have rewarded speculation at cost of long term modest growth investment And have encouraged churning of assets, to benefit of financial sector Easy to focus on 50% discount, but removing it without restoring indexation is iniquitous Was claimed indexation is complex. But huge complexities have been introduced to reduce CGT for some, but only some, long term investments

5. In defence of indexation Declared gain on high gain short term investment of $1000 held 2 years, 12% annual nominal growth, inflation 2.5%.

6. In defence of indexation Declared gain on low gain long term investment of $1000 held 30 years, 3.5% annual nominal return, inflation 2.5%.

7. In defence of indexation Declared gain on capital stable investment of $1000 held 30 years, 2.5% annual nominal return, inflation 2.5%.