In the final sitting week before the winter break, Malcolm Turnbull’s government is scrambling to get the numbers to pass the bill.

By Daniel Herborn

Posted on June 26, 2018

The Coalition needs to secure four more votes for the policy to successfully make it through the upper house of parliament.

The plan is to cut Australia’s company tax rate from 30% to 25% by the financial year ending in 2027. The tax cuts would mean a reduction of around A$65 billion in revenue.

“It’s basically a matter of cost,” Deloitte Access partner Nicki Hutley commented.

“We’re talking A$65 billion to the budget bottom line at a time when we’re trying to get the budget back into surplus.”

Speaking in parliament on 25 June 2018, Turnbull said reducing the company tax rate would have widespread benefits. “The fundamental question is one of competitiveness,” he said.

The government had previously relied on support from two senators from Pauline Hanson’s One Nation and two Centre Alliance senators to pass its personal income tax cuts.

Finance Minister Mathias Cormann told the ABC’s Insiders: “Our intention is to deal with (the proposed company tax cuts) this week, and our intention is to secure the necessary support through the Senate, in order to legislate those business tax cuts in full.”

In an interview with Neil Mitchell on 3AW on 22 June 2018, Prime Minister Malcolm Turnbull responded to a question on what concessions he could offer Pauline Hanson’s One Nation to get its support on company tax by saying his party would “just continue having respectful and private discussions” with crossbench senators who could support the company tax.

The government had previously made changes to tax for small businesses. From next financial year, Australian businesses with a turnover of less than A$50 million will pay a tax rate of 27.5% instead of the current 30%. This may prove short-lived however.

The Labor party has consistently opposed the company tax cuts and on 26 June 2018 opposition leader Bill Shorten said it would repeal existing tax cuts for businesses earning between A$10 million and A$50 million if it forms government. Bookmakers have the Labor Party as the strong favourite to win the next Federal election.

Treasurer Scott Morrison immediately hit back at Shorten’s comments.

“This is terrible news for 1.5 million Australians who work in those businesses that will have to face higher taxes under Labor if Labor is elected.

“How Labor thinks taxing those businesses with an average of 75 employees is going to help those businesses actually go out there and compete and make their way ahead is beyond me and I think it just demonstrates how Labor just don’t get it when it comes to having plans for a stronger economy.

“Labor used to talk about the ladder of opportunity. We all remember that…Well, under Bill Shorten, under the Labor Party today, what we have is the snake of envy.”

Shorten has sought to position the tax cuts as a central difference between Australia’s two major parties.

“I just don’t agree with Mr. Turnbull that the four big banks deserve a A$17 billion tax cut.

“It’s all a matter of values, he has made it very clear he’s for the top end of town, I’m for hospital and schools funding.”

Opposition to the company tax cuts

Polling shows the company tax cuts are seen as unnecessary by a majority of Australian voters.

A range of charities and NGOs have called on the government to scrap the proposed cuts. Oxfam, St Vincent de Paul, Anglicare Australia and UnitingCare Australia were among those who appealed to the Senate crossbenchers to vote against the legislation.

Claerwen Little, Australia National Director, said: “What we would really love to see the Australian Senate and the parliament focusing on this week are those three million (Australians) living in poverty and what the parliament and this country is going to do for them, rather than what we are going to do for the top end of town.”

The progressive think tank The Australia Institute also criticising the proposed company tax cuts as misdirected. “Giving business a A$65 billion dollar tax cut means billions of dollars less for services like schools and hospitals,” it wrote in an earlier research report about the impact of the tax cuts.

The Australia Institute also argued the benefits of the company tax cut would mostly flow to foreign, not Australian, shareholders. Further, it said the ‘big four’ Australian banks would benefit to the tune of A$9.5 billion over the next 10 years and it was unclear why they deserved such an incentive.