Mor­ri­son vows to fast-track tax cuts for small busi­ness – at a cost of $3.2bn

The Guardian Australia - - News - Paul Karp

La­bor has not ruled out sup­port­ing the Mor­ri­son gov­ern­ment’s plan to bring for­ward tax cuts for small and medium busi­nesses by five years at a cost of $3.2bn.

Un­der the plan, an­nounced on Thurs­day, the gov­ern­ment will lower the tax rate for busi­nesses with an an­nual turnover of less than $50m from 27.5% to 25% by 2021-22 rather than from 2026-27 as cur­rently leg­is­lated.

The Turn­bull gov­ern­ment passed tax cuts for small and medium busi­nesses in March 2017 but plans to ex­tend the tax cuts to big busi­ness were thwarted by the Se­nate, prompt­ing the Coali­tion to prom­ise to ac­cel­er­ate the tax cuts for small and medium busi­nesses in­stead.

In a state­ment Scott Mor­ri­son and the trea­surer, Josh Fry­den­berg, promised to in­tro­duce leg­is­la­tion in the next ses­sion of par­lia­ment, ar­gu­ing the pol­icy “will mean more in­vest­ment, more jobs and higher wages”.

“This means that a small busi­ness, such as an in­de­pen­dent su­per­mar­ket or a pub, that makes $500,000 profit, will have an ad­di­tional $7,500 in 2020-21 and $12,500 in 2021-22 to in­vest back into the busi­ness or staff, or help to man­age cash flow,” they said.

In June Bill Shorten ac­ci­den­tally an­nounced a plan to re­peal al­ready leg­is­lated com­pany tax cuts for busi­nesses earn­ing be­tween $10m and $50m but then backed down af­ter an in­ter­nal back­lash, propos­ing that busi­nesses al­ready in re­ceipt of tax cuts should keep them.

At a press con­fer­ence in Bris­bane, Shorten said La­bor would not “give a blank cheque” to the gov­ern­ment but promised to “keep an open mind” on the pol­icy.

“We are not rul­ing it out and we are not rul­ing it in,” he said. “We want to see the num­bers.”

Shorten said La­bor’s “first pri­or­ity” was spend­ing $14bn over 10 years on pub­lic schools and it would see what it could af­ford af­ter health and ed­u­ca­tion pri­or­i­ties.

“We have al­ready said we will sup­port leg­is­lated tax cuts to 27.5% for com­pa­nies whose turnover is up to $50m.”

Speak­ing on ABC’s AM on Thurs­day morn­ing, Mor­ri­son said it would be “up to small- and medium-sized busi­nesses” what im­pact the tax cut would have on work­ers’ wages, de­clin­ing to quan­tify the ben­e­fit to em­ploy­ees.

“I know that if small- and medi­um­sized busi­nesses are pay­ing less tax to the gov­ern­ment then they are more able to pay bet­ter wages to their em­ploy­ees,” he said.

Mor­ri­son ac­cused La­bor of plan­ning to sting the econ­omy with “an ex­tra $200bn in taxes” over 10 years.

La­bor has pledged to re­peal stages two and three of the gov­ern­ment’s in­come tax cuts, which to­gether flat­ten tax scales so work­ers earn­ing be­tween $40,000 and $200,000 pay the same rate.

When the Coali­tion aban­doned plans to take big busi­ness tax cuts to the next elec­tion, the Busi­ness Coun­cil of Aus­tralia said it had left “com­pany tax re­form half done” and Se­nate in­tran­si­gence meant that small busi­nesses would face “a huge tax cliff” as they grow.

In­de­pen­dent Tim Storer wel­comed the Coali­tion move in Au­gust, ar­gu­ing it vin­di­cated the de­ci­sion to block big busi­ness tax cuts.

On Thurs­day Mor­ri­son was not able to say if the gov­ern­ment al­ready had cross­bench sup­port to pass the new tax pack­age, but said they would “have an op­por­tu­nity to vote for it fairly soon”.

Pho­to­graph: Mike Bow­ers for the Guardian

Prime min­is­ter Scott Mor­ri­son (right) and trea­surer Josh Fry­den­berg say bring­ing for­ward tax cuts for small and medium busi­ness ‘willmean more in­vest­ment, more jobs and higher wages’.

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