A BUSINESS tax working group says a cut of two to three percentage points to the company tax rate could be funded through changes to the tax treatment of interest, capital allowances and research and development spending.
However the group, set up by the Gillard government after the Tax Forum in October 2011, said despite consultation with 20 groups and receiving more than 80 submissions it could not recommend a specific revenue-neutral way to lower the company tax rate.
"It was clear to the working group that there was not agreement in the business community to broaden the business tax base to fund a cut in the company tax rate at this time," the report found.
Lower corporate tax would increase Australia's ability to attract foreign investment and have other economic benefits in terms of higher profits and real wages and lower prices, the final draft report by the working group released on Wednesday says.
The group said the cut should be made "as economic and fiscal circumstances permit".
"This would need to be considered against other budget priorities and should take into account the overall mix of business taxation," the report said.
A one percentage point cut in the company tax rate could raise GDP and real wages by around 0.2 per cent, the group said.
Shadow Treasurer Joe Hockey says it shows Labor's tax reform is in chaos.
"The business tax working group was set an impossible task to find a way of hiking taxes to fund a cut," he said in a statement on Wednesday.
"How can the business community have any confidence in a government that blindsided them on Monday when Wayne Swan lacked the courtesy to even consult with the Business Tax Working Group over the changes to company tax schedules announced in the Mid Year Economic and Fiscal Outlook?"
Mr Hockey said a genuine company tax cut is one funded from savings in the budget not by raising other taxes to pay for it.
The tax institute also said they were disappointed by the end of the opportunity for company tax reform.
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