The Commonwealth Bank has posted a record first-half cash profit of $4.9 billion.
THE Commonwealth Bank has posted a huge half-year return but the government wants to make sure it could have been even bigger.
Critics of the Coalition argue today that this demonstrates the flaws in government tax policy.
The CBA took in about $5 billion after tax, but if the government gets its way that figure would be even more massive.
Our biggest bank today reported a pre-tax profit for the six months to December of $6.866 billion — a record 6 per cent greater than the previous high recorded in the first half of last year.
After paying $1.9 billion in tax, the half-year profit came to $4.895 billion.
The government wants to eventually reduce the corporate tax rate from 30 per cent to 25 per cent by 2026, which would make the CBA result even more spectacular.
This tax rate would have boosted the after-tax figure by $325 million, according to calculations today by the Australia Institute. That’s a further $650 million for the bank over a full year.
The profit and the calculation came as Treasurer Scott Morrison warned individual taxpayers would have to be hit harder if cuts to welfare were not passed by Parliament.
However, the government’s tax policy is facing criticism, and not just from the Labor Opposition and crossbenchers who are looking at rejecting corporate tax relief and aiming to protect the needy on welfare.
“Large company tax cuts are not a cost-effective way of delivering jobs and growth,” Australia Institute executive director Ben Oquist said.
“There are more targeted methods to boost the economy in a fairer way that would deliver better jobs, prosperity and save the budget bottom line.”
Prime Minister Malcolm Turnbull today called the warning “a penetrating insight into the obvious”.
“We have to continue the task of budget repair. So that’s why we are calling on the Senate to support the savings measures,” Mr Turnbull told reporters.
He defended the corporate tax cut proposals as job creation through encouraging investment.
“You’re not going to get more jobs, higher wages, more hours by taxing the businesses that employ Australians more,” he hold Canberra’s 2CC radio.
“So if you want to have more investment, you’ve got to increase the return on investment. The best way to do that is to lower company tax and that’s what we’re seeking to do.”
The government wants to start by reducing the rate for small businesses with turnovers of under $10 million to 27.5 per cent for this current financial year.
The turnover threshold would rise in steps to take in bigger companies.