Australian Treasurer Scott Morrison sounded alarm bells about the impact of the recently-passed American tax cuts on Australia’s economy.
If Australia doesn’t pass its own version of the Trump tax cuts, Morrison fears the country will take a hit to its GDP of up to 1 percent. Morrison initially proposed a $65 billion tax cut, saying it woulld add 1 percent to Australia’s GDP. After Trump’s cut, however, Morrison warned that the cuts are necessary for the country’s economy not to contract.
Morrison cited treasury analyses showing that Australia “may experience a significant recessionary impact and a potential downgrade in revenues if it does not lower its corporate tax rate from 30 percent to 25 percent in coming years, in response to Trump’s cuts,” according to The Guardian.
Because the United States will no longer be a country with one of the highest corporate tax rates in the developed world, Australia risks being “marooned,” as the country’s Treasury Department said in its analysis.
“The Trump tax cuts are coming. If we fail to respond, they will take Australian jobs, investment and wages with them,” Morrison said.
The recently passed Republican tax bill is one of the most dramatic overhauls of the US tax code in 30 years and lowers the corporate tax rate from a high of 35 percent to 21 percent. Over 80 percent of individuals will see a lowered tax rate as well.
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