17 May 2006

Lower taxes equals more skilled migrants Australia advised

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Australia's tax system has been labeled counter-productive by putting off migrant workers as it bids to solve a chronic skills shortage in the country.

The Australian newspaper reports today on a just released report by the Productivity Commission that calls for changes in the way skilled migrants are treated under the tax system to ensure Australia remains competitive in the international labour market.

The Productivity Commission took soundings from the Business Council of Australia who recommended a reduction in the top two tax rate brackets to make Australia a more competitive destination for attracting and retaining immigrants.

They argued that "high marginal tax rates undermine Australia’s competitiveness as a location for high value occupations and activities", and recommended to the Government that, "lowering the top two highest marginal tax rates in the personal tax structure will help make Australia a more competitive destination for attracting and retaining skilled migrants."

Last week the Australian Government did go someway towards appeasing the BCA and potential new migrant workers in the latest budget by announcing they were reducing the second-highest rate of tax from 42 per cent to 40 per cent and the top rate from 47 per cent to 45 per cent. The BCA though has recommended both rates be cut to "at least 40 per cent."

They also called for reform to the Australian tax treatment of superannuation and employee share schemes for temporary residents as a priority, especially as these migrants - who plan to return to their homelands - may still be occurring taxation in their native country.

The number of temporary business visas to Australia has almost tripled over the last 15 years, from 182,000 in 1995 to 389,000 in 2004.

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