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