Treasurer Scott Morrison speaks to Leigh Sales about the government’s goal to stimulate jobs and growth, and their plans to cut taxes for big business. Courtesy: ABC 7.30
TREASURER Scott Morrison has not given up pursuing the remainder of the government’s 10-year business tax plan and will present the next phase to the Senate when the government believes it will pass.
The parliament on Friday agreed to a tax rate of 27.5 per cent for businesses with a turnover of up to $50 million, to be phased in over the next three years, or “stage one of the plan”, as Mr Morrison describes it.
“We haven’t moved away from this at all,” he told ABC television’s Insiders. “We remain absolutely committed to this plan because this plan is what is going to attract investment.” He does not necessarily believe in waiting until after the next election, given the Senate crossbench has already shifted from supporting a rate reduction for businesses with a turnover of up to only $10 million.
The overall package would deliver a tax rate of 25 per cent for all businesses in 10 years time when most now pay a rate of 30 per cent.
Treasury modelling suggests the economy would gain a one per cent lift to growth if the whole plan is passed.
Mr Morrison would not say what the impact of the measures passed on Friday would be.
“We are committed to getting the full dividend of the full plan,” he said.
His comments come as he said that economic growth, disciplined spending and tackling housing affordability will be the cornerstones of next month’s budget.
“It is all about growth to support the jobs and higher wages we want Australians to have and it is about continuing on the disciplined path of managing the budget,” Mr Morrison said.
The budget, to be delivered on May 9, is projected to return to balance in 2021, “and that remains a difficult challenge”, he said.
Business Council of Australia chief executive Jennifer Westacott is “pretty confident” the government will eventually deliver the full tax cut to all businesses.
“This is quite a big change. Three months ago people were writing this off, not even for $10 million,” she told Sky News on Sunday.
However, she warned the problem with having a two-tier tax system is companies approaching a $50 million turnover will start planning their businesses for taxes purposes, possibly carving off bits of their firms rather than pursuing growth.
“In the UK they had this two-tier tax system and they got rid of it pretty quickly and headed down the path of a low rate for all businesses,” she said. Labor had opposed the $50 billion tax plan, other than for businesses with a $2 million turnover.
Shadow assistant treasurer Andrew Leigh would not say whether Labor would repeal the tax cut in government.
“We will have those conversations as we come into the next election,” Dr Leigh told Sky News.
“We will be looking at the impact this has on our triple-A credit rating and that’s probably a bigger concern to many businesses than a company tax cut.”