No case to reduce corporate taxes - The Malta Independent

Contributing sentiments towards policy:

64% : Another study about the experience from Canada concludes that across-the-board cuts in corporate tax rates are a terribly ineffective way to foster more business capital spending.
55% : Under an imputation system inherited from the days when we were a colony and which was approved by the EU in 2006, the law prevents any double taxation of the same income in the hands of the company and again in the hands of the shareholders.
52% : The chargeable income of a company resident in Malta is subject to flat rate tax of 35%.
52% : The findings vary considerably: The main argument for reduced corporate tax rates is that, lured by the prospect of keeping a larger share of their subsequent profits in after-tax income, companies would make new capital investments.
50% : Can we make a definitive statement about the outcome of changes in corporate tax rates?
50% : Naturally, nobody in Malta has published any serious study showing what is the relationship between corporate taxes and business investment in Malta and how any changes to the corporate tax rate would impact business investment, GDP growth, and income distribution.
49% : It must be said that recent decades have been characterised by falling statutory corporate tax rates on the one hand, and a rise in corporate tax bases on the other, in many countries.
49% : In fact, the study found that the decline in business capital investment since the turn of the century has coincided almost perfectly with substantial tax reductions!
48% : The amount of the tax refund is set at 67% of the tax paid (5/7ths in the case of passive interest and royalties).
48% : Meanwhile, Keynesian economic theory asserts that tax cuts alone are insufficient for sustained growth and should be complemented by government spending on infrastructure and social programmes.
47% : Incentives such as accelerated depreciation, investment tax credits, and public co-investments are more likely to get strategic or large projects off the ground.
44% : On the other hand, some economists and politicians have militated for higher corporate taxes as a tool to reduce deficits and fund public expenditure.
40% : Corporate tax reductions have often been proposed as a magic formula to drive business expansion and stimulate economic growth.

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