The Productivity Commission has reinforced its call for a controversial hybrid corporate tax system, including a net cashflow tax, aimed at driving business investment across Australia.
The Commission's latest report, part of a series of five inquiries launched in December 2024, makes 47 recommendations to reduce regulatory burdens by $10 billion and enhance productivity.
Under the proposed tax model, small and medium-sized businesses earning under $1 billion would face a 20% tax rate, while larger firms would be taxed at 28%, with an additional 5% net cashflow levy applied across all companies.
The Commission projects the reform could lift GDP by $13 billion (0.7%), increase investment by $10.2 billion (2.2%), and raise labour productivity by 0.5%.
Deputy Chair Alex Robson said the Commission is "confident it is the best revenue-neutral option for improving investment" and has also examined alternative measures such as partial asset write-offs and corporate equity allowances.
Treasurer Jim Chalmers welcomed the reports, noting the government will "consider all of it" ahead of the next budget but may not adopt every recommendation.
The inquiries focused on creating a resilient economy, building a skilled workforce, leveraging digital technologies, improving care efficiency, and investing in clean energy and net zero initiatives.
Commission Chair Danielle Wood stressed the urgency, saying, "Australia's productivity growth has stalled since 2016. Our recommendations, if fully implemented, would add billions to the economy, benefiting workers, households, and businesses today and into the future."