With nothing else on the reform agenda, Prime Minister Malcolm Turnbull will put the Coalition’s full company tax cut plan to a Senate vote by the end of March. From The AFR:
The government has only enough stated support so far to legislate a tax cut for companies with annual turnover capped at $10 million but will persist in trying to persuade the Senate to give more ground before the March deadline. If it fails, then it is likely to split the bill and cut a deal…
The government… needs eight crossbench votes…
Labor and the Greens oppose the corporate tax cuts while One Nation and David Leyonhjelm are supportive.
The three Nick Xenophon Team votes are crucial but Senator Xenophon repeated yesterday that his team was still prepared to allow only the first phase of the tax cut plan – a 27.5 per cent rate for all companies with a turnover of up to $10 million…
Labor has argued that the government should dump the company tax cuts, saying the $48 billion it would save would assure a return to surplus and would shore up the AAA credit rating.
The government argues the cuts are needed to provide more sustainable growth and, hence, revenue.
I explained in detail yesterday why cutting the company tax rate from 30% to 25% is such a bad idea (read here). In a nutshell:
- most of the benefits would flow offshore;
- national income would be reduced;
- the Budget would lose revenue, resulting in tax rises or expenditure cuts elsewhere, and potentially a credit rating downgrade (hence lowering jobs and growth); and
- Treasury’s own modelling showed almost no benefits to jobs and growth.
If the Turnbull Government genuinely wants to boost “jobs and growth”, it would be far more sensible to use the tens-of-billions of dollars that would be spent on company tax cuts to undertake critical infrastructure investment and restore Australia’s dilapidated infrastructure stock, which is under siege from rabid population growth caused by the federal government’s mass immigration agenda.
Let’s hope the Senate holds firm and rejects the Coalition’s reckless company tax cut plan.
