$ 1.5 trillion US tax saving has no major impact on business capex plans: survey
FILE PHOTO: US President Donald Trump is showing his signature after signing the $ 1[ads1].5 trillion tax recovery plan along with a short-term government expense bill in the Oval Office of the White House in Washington, USA, on December 22, 2017. Jonathan Ernst
WASHINGTON (Reuters) – The Trump administration's $ 1.5 trillion tax package did not seem to have any major impact on corporate capital investment or employment plans, according to a survey released a year after the largest US tax code revision for more than 30 years .
The Norwegian Association of Business Economics (NABE) quarterly business terms published on Monday showed that while some companies reported accelerating investments due to lower corporate tax, 84 percent of respondents said they had not changed plans. This corresponds to 81 per cent in the previous survey, which was published in October.
The White House had predicted that the massive fiscal stimulus package, marked by the reduction in corporate tax rate to 21 percent from 35 percent, would increase corporate spending and job growth. Tax reductions came into force in January 2018. "A large majority of respondents, 84 percent, suggest that one year after the passage has passed, corporate tax reform has not allowed companies to change employment or investment plans," says NABE President Kevin Swift  However, the lower tax rates had an impact on the commodity sector, with 50 percent of respondents from this sector reporting increased investments in their companies, and 20 percent said they redirected recruitment and investment to the United States from abroad. further decline in corporate expenditure after moderately strong in the third quarter of 2018. The survey's capital expenditure target fell in January to its lowest level since July 2017. Expectations for capital expenditure for the next three months also weaken.
"Fewer companies increased capital expenditure compared to the October survey but the decline seemed to be concentrated It's in structures than in investment in information and communication technology, "said Swift, who is also the finance director of the American Chemistry Council.
According to the survey, employment growth increased modestly in the fourth quarter of 2018 compared to the third quarter. Only over one-third of respondents reported increased employment among their companies over the past three months, up from 31 percent in the October survey. The prospective employment target for the survey fell to 25 in January from 29 in October.
Reporting by Lucia Mutikani; Editing by David Gregorio