TREASURER Scott Morrison has not given up pursuing the remainder of the government’s 10-year business tax plan but will not put a figure on the economic benefit from the tax cuts that have already been passed by the parliament.
Shadow treasurer Chris Bowen says you would need a “microscope” to find them.
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 on Sunday. The government will present legislation for cuts for larger businesses — which would deliver a tax rate of 25 per cent in 10 years time rather than 30 per cent now — when it believes it has the support of the Senate.
Mr Morrison believes that does not mean 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.
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.
Mr Bowen said the fact the treasurer did not answer the question was telling. “You would need to find a microscope to find the economic dividend,” he told reporters in Sydney. “It just goes to show that this government’s slogan of jobs and growth is just that.”
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.
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.”