Every time I have a conversation about tax policy someone always tells me that before I make the changes I want I have to “stop all the tax breaks for big business”.
So what are these “tax breaks for big business” that I need to get rid of first?
Fortunately, each year the Government releases a list of all of its “Tax Expenditures”. And for all the normal people who have no idea what a tax expenditure is, the Government defines it as…
Tax expenditures typically involve tax exemptions, deductions or offsets, concessional tax rates and deferrals of tax liability.
So lets go through the top 25 of these exemptions, deductions or offsets, concessional tax rates and deferrals of tax liability and see what “tax breaks” those big businesses have. This list can be found at page 9 of this document.
- By far the biggest is the CGT exemption for individuals on their main residence ($63 billion a year).
- Next is the superannuation exemptions of just over $30 million, which again only apply to individuals as super belongs to individuals.
- GST-Free food, education, aged care and health cost over $17.5 billion a year, which exists to help individuals with important costs.
- The 50% CGT discount for individuals and trusts is next at just under $10 billion and again this cannot be used by almost all big business.
- Family Tax Benefit exemption, Child Care benefit exemptions, Medicare levy reductions combined cost $8.5 billion a year.
- Tax concessions for charities, not for profits, and donations to these organisations costs $4.5 billion a year.
As yet, not a single “tax break” for big business. Actually, in the top 25 tax expenditures all big business gets is:
- Exemption from interest withholding tax on certain securities at $2.3 billion a year (but most of this relates to people buying Government debt);
- Concessional rate of excise levied on aviation gasoline and aviation turbine fuel at $1.2 billion a year; and
- Capital works expenditure deduction at $1.1 billion a year
I did not include lower company tax rate and simplified depreciation as they only apply to businesses with turnover less than $2 million – hardly big business.
So while the tax system is littered with tax breaks for individuals, you would be trying hard to find any substantive tax breaks for big business in our tax system. If you don’t borrow overseas, don’t own aircraft and lease your buildings there is nothing in this list for your big business at all.