Forget the taxpayer bailout, Qantas needs a big tax cut says Alan Joyce
June 24, 2016 - 12:15AM
CBD
Colin Kruger
Do you remember the dark days of December 2013 when Qantas boss Alan Joyce was desperately trying to convince Tony Abbott's government that the airline needed a taxpayer bailout?
Well, you're not the only one for whom this dark chapter is ancient history.
Qantas has regained altitude after that multi billion dollar loss in 2014. And with nothing but record profits as far as the eye can see, Joyce has new challenges to address.
So there he was on Thursday dealing with the company's new problem - having to pay tax now that it is profitable again.
"The country as a whole has a lot to gain from large companies getting a tax cut – which, to be honest, is the only reason governments would risk suggesting one," said Joyce in an opinion piece for his corporate union, the Business Council of Australia.
He pointed out that every time Qantas considered an investment it conducted detailed analysis to see whether it would make money for the airline. "The amount of company tax we have to pay forms part of that analysis – so logically, a lower company tax rate will increase how often we say yes to new investment," he said.
"So if you're asking the question of 'what's in it for me' when it comes to a company tax cut for big business, remember that we're all part of the same economy. And as the saying goes, a rising tide lifts all boats."
CBD prefers to back the opinion of colleague Ross Gittins on just how much this rising tide of corporate tax cuts will lift the boat of the average taxpayer: "the Treasury modelling finds that the level of employment in 20 or 30 years' time will be just 0.1 per cent higher than otherwise."
Irish luck
Joyce also mentioned his recent trip to Dublin and a taxi-driver who complained about how busy the area had become since companies like Facebook, Google and LinkedIn had set up large offices there. "But the driver then stopped himself and said, 'It's good they're here, I guess. They brought a lot of jobs with them'."
Joyce attributed this to Ireland's low company tax rate.
That's one way of looking at it.
In preliminary findings in 2014, European antitrust authorities said Apple's tax arrangements were improperly designed to give the company a financial boost in exchange for jobs in Ireland.
And a recent report names Ireland as one of the tax havens, which collectively suck $6 billion in tax revenue from Australia every year.
And keep in mind these corporate tax cuts will cost Australia $8.3 billion a year.
SMH.com.au
Business Council of Australia OpEd
REDUCE COMPANY TAX AND OUR ECONOMY WILL TAKE OFF
23 June 2016
This opinion article by BCA Member and Qantas Chief Executive Alan Joyce (pictured) was published in the Herald Sun on 23 June 2016.
A few weeks ago, I was in Ireland for a big aviation conference. It’s an annual event and airline CEOs from around the world were all there. At one stage, one of them told a story about a taxi ride they took through part of Dublin nicknamed the Silicon Valley of Europe.
The traffic was bad and the taxi driver was complaining about how busy the area had become since the likes of Facebook, Google and LinkedIn had set up large offices there. But the driver then stopped himself and said, “It’s good they’re here, I guess. They brought a lot of jobs with them.”
A key reason those companies where ‘there’ was because of Ireland’s company tax rate. A while ago, the government made the decision to cut it to 12.5 per cent for most companies – less than half of what it is in Australia. On the one hand, this cut the revenue they received from companies. But on the other hand, a lot more companies wanted to set up in Ireland. And the companies that were already there could grow because they were paying less money in tax. Combined, it helped grow the total amount Ireland collected in tax.
Ireland’s not alone in making this decision. The tax rate in the UK is 20%. In Singapore it’s 17%. In Switzerland it’s 8.5%. And these levels are designed to encourage business investment, which then leads to more jobs and ultimately more prosperity for the country as a whole.
In Australia, the debate on company tax has followed a fairly predictable course. A tax cut is proposed. Companies welcome it because they stand to benefit. But individuals and households are encouraged to feel that it’s unfair that companies get a tax cut and they don’t.
In reality, the country as a whole has a lot to gain from large companies getting a tax cut – which, to be honest, is the only reason governments would risk suggesting one.
Every time Qantas weighs up a decision to invest in something new (like a new airport lounge, for instance) we run a detailed analysis on the numbers to make sure it’s something that will ultimately make money for us. The amount of company tax we have to pay forms part of that analysis – so logically, a lower company tax rate will increase how often we say yes to new investment.
To stick with the same example, the decision to build a new lounge brings a lot of jobs with it – in designing it, through buying the materials required, construction, and ultimately stocking and running it. So it’s not hard to see the relationship between a lower tax rate and overall job growth and economic activity.
Qantas has hundreds of suppliers that are small to medium size businesses. We employ 30,000 people ourselves, support jobs for another 30,000 in the wider economy, and contribute (directly and indirectly) almost 1 per cent of the nation’s GDP - as well as paying or collecting $2 billion a year in taxes of all kinds for the government. Other large companies work on a similar scale.
So if you’re asking the question of “what’s in it for me” when it comes to a company tax cut for big business, remember that we’re all part of the same economy. And as the saying goes, a rising tide lifts all boats.
bca.com.au