There’s been a lot of ink spilled on the pluses and minuses of cutting the corporate tax rate from 30% to 25% for all Aussie businesses, regardless of size.
There is some validity to both sides of the argument. But at the end of the day, there is no getting around the fact that Aussie companies paying a 30% tax rate will be operating at a disadvantage to their foreign competitors who pay far lower taxes.
And this will in turn have a negative impact on wage growth and new hiring plans.
While Treasurer Scott Morrison concedes the proposed tax cuts are politically difficult, he insists they’re crucial to the economy.
Liberal frontbencher Michael Sukkar agrees, saying the government’s tax plans, which is opposed by Labor, are critical to boosting growth and job prospects.
‘What Bill Shorten is essentially saying is every Australian company will compete against international competitors with one arm tied behind their back,’ Mr Sukkar told Sky News on Thursday.
‘How on earth can we have tax rates that are much higher than any of our competitors without it having some sort of impact on our prosperity and investment in this country?’
Labor argues corporate tax cuts take money from schools and hospitals and hands it to the big banks — a line that hurt the Liberal vote in two recent by-elections.
Coalition MPs want the tax cuts axed
Senior coalition MPs want the tax cuts axed if an upcoming Senate vote on the legislation fails.
The tax package would cut the tax rate from 30% to 25% for companies with annual revenues above $50 million.
Mr Morrison has stopped short of promising to take the corporate tax plan to the next election if the Senate rejects it.
‘It’s the right economic policy. The politics is a separate issue. Governments always have to manage politics,’ he said on Wednesday.
Home Affairs Minister Peter Dutton said Labor had used the tax cuts issue against the coalition in the Longman by-election on Saturday.
‘We shouldn’t give them the ammunition to throw back at us,’ he told Seven Network.
Resources Minister Matt Canavan said the government was talking through options with the crossbench.
‘I think John Howard said once if you can get 80% of what you’re asking for, it’s better than nothing,’ Senator Canavan said.
Backbenchers want the cuts to go to a vote in the Senate and dump them if they fail, but Mr Morrison wouldn’t be drawn on whether the government would shelve the policy if it was voted down.
Key crossbench senator Derryn Hinch has suggested cutting taxes only for companies with turnovers up to $500 million to get the log-jammed plan through parliament.
The Australian Tribune with AAP
PS: If you’re more than a few years away from retirement, your job could be at risk of being automated. This free report details the changes ahead. And some steps you could take to ensure you — and your children — are well placed in the age of automation.