'We can't afford not to cut tax': BHP CEO
One of Australia's most successful technology entrepreneurs, Mike Cannon-Brookes, offered moral support for a radical proposal from fund manager Hamish Douglass to make a 50 per cent income tax cut available to any company that wants it.
The co-founder and co-CEO of Atlassian, whose popular Jira program is used by teams to develop commercial software, said he liked the Magellan Financial Group CEO's plan to allow fast-growing companies to forgo dividend credits in return for a 15 per cent tax rate instead of 30 per cent.
"I'm far from an expert on country-level tax decisions, but Hamish Douglass is a smart cookie ... and I totally +1 the disruption piece," he wrote on Twitter.
"And it should be acknowledged (which I see too little in the tax debate) that dividend imputation is a huge difference to the US rule system."
And it should be acknowledged (which I see too little in the tax debate) that _dividend imputation_ is a huge difference to the US rule system.
— Mike Cannon-Brookes ⛄️ (@mcannonbrookes) March 6, 2018
Tax credits, also known as dividend imputation, are of little use to fast-growing companies because they reinvest most of their profits rather than paying dividends.
Restart momentum
The suggestion by Mr Douglass, made at The Australian Financial Review Business Summit, was pitched as a way to restart momentum for the debate over corporate taxes, which has become mired in a fight over whether regular people would benefit from a gradual cut from 30 per cent to 25 per cent.
The government's plan to extend a cut to all companies is stalled in the Senate, where Pauline Hanson has been convinced to oppose it.
"Frankly, I don't think it's going to make any difference at all," Mr Douglass told the summit in Sydney on Tuesday about the five percentage point reduction.
Idea floated by Hamish Douglass of optional 15% rate is interesting but suspect better idea is to cut corporate tax for everyone and abolish dividend imputation. People will argue it favours foreign investors but our tax base will be massively eroded if we don’t act.
— Paul Bassat (@PaulBassat) March 6, 2018
Another top entrepreneur, Paul Bassat, agreed with part of the proposal, which would allow companies with many foreign investors to pay less tax rather than receive tax credits, which are useless for foreigners.
"The idea floated by Hamish Douglass of optional 15% rate is interesting but suspect better idea is to cut corporate tax for everyone and abolish dividend imputation," the co-founder of the SEEK job-search website wrote.
"People will argue it favours foreign investors but our tax base will be massively eroded if we don't act. Australia's addiction to dividends is a bit like me at 3pm after a piece of cake. You feel great for a bit but the after effects are no fun and you try to solve problem with more cake."
Union criticism
![Hamish Douglass and Mike Cannon-Brookes at a conference at the Sydney Opera House last November.](http://web.archive.org./web/20180307061320im_/http://www.afr.com/content/dam/images/g/z/n/g/2/f/image.imgtype.afrArticleInline.620x0.png/1510884259082.jpg)
The push to cut corporate taxes is being driven in part by concerns the lower US corporate tax rate will cost Australia badly needed investment as companies move resources there.
Opponents, including Labor leader Bill Shorten, have portrayed it as $65 billion "handout" to business, without mentioning that business could pay more than $1 trillion in tax over the decade covered by the estimate, according to the Business Council of Australia, a big-business lobby group.
The national president of the Australian Manufacturing Workers Union, Andrew Dettmer, described the plan as "the ultimate neoliberal approach to tax" and claimed corporate tax was already optional because companies could get out of paying it.
"This merchant banker wants to make it voluntary," he wrote about Mr Douglass, who oversees about $60 billion of investments. "Corporate utopia. Words fail."
![Magellan CEO Hamish Douglass on stage Tuesday at The Financial Review Business Summit Sydney.](http://web.archive.org./web/20180307061320im_/http://www.afr.com/content/dam/images/h/0/x/2/h/0/image.imgtype.afrArticleInline.620x0.png/1520297347180.jpg)