How will the corporate tax cut be funded?

by Richard Denniss

The Coalition’s proposal to reduce the corporate tax rate will result in a significant loss of tax revenue and, in turn, will have a significant impact on the budget balance.

The government has argued that the loss in tax revenue will be offset, in part, by the increase in economic activity that they believe will flow from the reduction in the corporate tax rate. This activity is assumed to take the form of increased investment, increased employment and higher wages.

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