The Government is poised to axe some tax breaks to boost the competitiveness of Australian companies in the tech industry and give it a big boost in revenue, according to a Senate estimates hearing.
Key points:Australia’s tech sector is one of the most innovative and successful in the world but is struggling to attract investors and attract workersThe Government has committed to scrapping the tax breaks in 2018The tax break was introduced to boost competition in the global tech sector and boost the state’s export competitivenessA major report released by the Business Council of Australia has called for it to be scrapped after its findings showed the government was not boosting the state-owned tech sector.
The review of the tax break, released in April, said the move had been a “laborious, time-consuming and politically unpopular process” that had hurt the Australian economy and the jobs of many Australians.
But it was not enough to convince the Government to axe the tax cut, which was introduced in 2009.
The Government says it is committed to cutting the tax on foreign tech firms by 10 per cent by 2020, while it is also seeking to introduce a national tax on the tech sector that would take effect in 2019.
Labor has also vowed to reverse the decision to cut the tax rate on foreign firms.
“I don’t think that the Government is going to go down the path of cutting the [tax] cut in 2020,” Opposition Leader Bill Shorten said.
“The Government is not going to do that, because it has not been the right thing to do.”
This was a deliberate move by the Government, it was done with the clear intention of hurting the Australian tech industry.
“We are not going down that path of lowering the tax rates on foreign companies.”
Senator Nick Xenophon said the decision by the government to axe many of the measures was “disastrous” and that the government’s position was “wrong”.
“The government has been clear that it is against any tax relief that is not in the national interest and is against cutting the tech tax.”
They are not committed to protecting the Australian people and they have been totally opposed to any measure that is a national benefit,” he said.
The report found that while some of the tech companies are competing against foreign competitors, Australia was not the best place to do business.
The top five countries for foreign tech investment were China, India, Singapore and South Korea.
The biggest foreign tech companies were Amazon, Microsoft, Apple and Amazon.com, which collectively account for $US11.3 billion in annual foreign investment.
The biggest overseas tech companies accounted for more than $US1.5 billion, followed by Facebook, Netflix, LinkedIn, Oracle and Twitter.
The tax breaks had attracted $US40 billion in foreign investment over the past five years.
Many of the firms are in the technology sector, where they employ hundreds of thousands of Australians and produce technology that is used in everything from medical imaging to online gaming.
The government also introduced a special levy on tech companies to help fund projects like infrastructure, which is expected to be a $1.2 billion boost to the Australian technology sector.
Labor’s business spokesman David Shoebridge said he had “serious concerns” about the proposed changes.”
Labor’s economic adviser Paul Butler said he was “delighted” with the Government’s announcement that it would drop the tech levy. “
This is a tax cut that is helping the Australian companies that are the future of our economy, but it is not the future that we want.”
Labor’s economic adviser Paul Butler said he was “delighted” with the Government’s announcement that it would drop the tech levy.
He said the Government should have a “real debate” on whether it was the right move.
“That’s what the public wants, that’s what I believe the Australian public wants.
The answer is yes, we should have real debate on this,” he told reporters.”
But I also believe that the Australian Government has to show leadership.
Labor has said that it will not reduce the tax exemption for foreign companies unless they invest more in Australia, which means this tax break should be axed.”