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Extended Company Tax Reforms: A CGE analysis

Author

Listed:
  • Janine Dixon
  • Jason Nassios

Abstract

This study presents updated and extended economy-wide modelling of company income tax reform in Australia, using the VURMTAXG model. Relative to Nassios et al. (2025), this study introduces three extensions: estimates of foreign ownership shares by industry and firm size (these were previously estimated by industry only); the implementation of a Net Cash Flow Tax (NCFT); and consideration of threshold effects of a staged Corporate Income Tax (CIT) schedule under monopolistic competition. We find that a Net Cash Flow Tax displays considerable potential to recoup lost revenue from cuts to the CIT rate, taking pressure off domestic households and reversing losses in gross national income, domestic welfare, real post-tax wages and real private consumption associated with a cut to the CIT rate. Even after accounting for foreign ownership shares by firm size, and productivity losses due to the effects of size thresholds for CIT, the implementation of the full package of CIT cuts funded mainly by a NCFT and residually by personal income taxes is shown to increase gross national income and economic welfare.

Suggested Citation

  • Janine Dixon & Jason Nassios, 2025. "Extended Company Tax Reforms: A CGE analysis," Centre of Policy Studies/IMPACT Centre Working Papers g-361, Victoria University, Centre of Policy Studies/IMPACT Centre.
    • Handle: RePEc:cop:wpaper:g-361
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    References listed on IDEAS

    as
    1. James A. Giesecke & Christopher King & Jason Nassios & Nhi Hoang Tran, 2021. "The impact of GST reform on Australia’s state and territory economies," Applied Economics, Taylor & Francis Journals, vol. 53(51), pages 5929-5947, November.
    2. James A. Giesecke & Nhi H. Tran, 2018. "The National and Regional Consequences of Australia's Goods and Services Tax," The Economic Record, The Economic Society of Australia, vol. 94(306), pages 255-275, September.
    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

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    JEL classification:

    • C68 - Mathematical and Quantitative Methods - - Mathematical Methods; Programming Models; Mathematical and Simulation Modeling - - - Computable General Equilibrium Models
    • E62 - Macroeconomics and Monetary Economics - - Macroeconomic Policy, Macroeconomic Aspects of Public Finance, and General Outlook - - - Fiscal Policy; Modern Monetary Theory
    • H21 - Public Economics - - Taxation, Subsidies, and Revenue - - - Efficiency; Optimal Taxation
    • H25 - Public Economics - - Taxation, Subsidies, and Revenue - - - Business Taxes and Subsidies

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