Entire company tax cut will go to Senate

Angus Livingston and Daniel McCulloch
(Australian Associated Press)


An unpopular corporate tax cut will go to the Senate “in its entirety” but senior members of the Turnbull government want the policy axed if the vote fails.

Treasurer Scott Morrison concedes the company tax cuts are politically difficult for the Turnbull government but is adamant they will help the economy.

He stopped short of promising to take the corporate tax measure 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,” Mr Morrison told ABC radio on Wednesday.

But Home Affairs Minister Peter Dutton said Labor had effectively used the tax cuts against the coalition in the Longman by-election on Saturday.

“We shouldn’t give them the ammunition to throw back at us,” he told the Seven Network.

Labor argues the corporate tax plan is taking money from schools and hospitals and giving it to big banks – a line that hurt the Liberals in two recent by-elections.

“We are taking that policy in its entirety back to the Senate as soon as we can,” Nationals deputy leader Bridget McKenzie told the National Press Club.

Key crossbench senator Derryn Hinch has suggested cutting taxes only for companies with turnovers up to $500 million to force the log-jammed plans through parliament.

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 per cent of what you’re asking for, it’s better than nothing,” Senator Canavan told Sky News.

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.

Liberal backbenchers Tony Pasin and Jim Molan questioned the timing of the policy after revelations of misconduct in the banking sector.

“By doing it now at the same time as the royal commission, we’re making a rod for our back,” Senator Molan told 2GB.

The tax package would cut the tax rate from 30 per cent to 25 per cent for companies with annual revenues above $50 million.

Finance Minister Mathias Cormann warned Senator Hinch’s $500 million cap proposal would be counterproductive.

“If you put a cap at which essentially a higher company tax rate would kick in, you provide a perverse incentive for bigger businesses to become smaller businesses,” Senator Cormann told the Seven Network.


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Categories: Tax