Labor has confirmed it will repeal the government’s company tax cuts if passed by the Senate this week or some other time before the election.
With the government still trying to secure the final two Senate crossbench votes to pass legislation for the remainder of the package, Opposition leader Bill Shorten and shadow treasurer Chris Bowen said Labor would fight the issue all the way to the election.
Labor, if elected, would repeal the remainder of the package which would cut the tax rate from 30 per cent to 25 per cent for all companies by 2026-27. This is worth $35 billion over a decade.
Labor had yet to decide whether it would also repeal the element of the tax package which has already been legislated – a reduced rate for companies with annual turnovers capped at $50 million. This is worth another $29 billion over 10 years.
“Labor, regardless of what legislation has passed this week, Labor will repeal this corporate tax giveaway of $65 billion to the biggest companies in Australia, the banks and the multinationals,” Mr Shorten said.
“In terms of the earlier corporate tax legislation, which has already been passed prior to this week, Labor will consider its final position on that in the context of the information we receive in the (May) budget.”
“But I want to make very clear to the crossbench senators and to Australians, Labor does not support giving away $65 billion to the top end of town in corporate tax giveaways.”
The government needs nine of the 11 Senate crossbenchers to pass the legislation and is trying to do so before Easter. It has seven votes in the bag. The two Nick Xenophon Team Senators are opposed meaning it needs the votes of independents Derryn Hinch and Tim Storer.
On Tuesday, The Australian Financial Review revealed a secret survey of chief executive officers undertaken by the Business Council of Australia showed more than 80 per cent said they would either invest the proceeds of a tax cut back in the company or boost returns to shareholders.
Fewer than 20 per cent said they would directly boost wages or employment.
Mr Shorten said this report “just shows what a lie this whole corporate tax policy is built upon” while Greens Senator Peter Whish-Wilson said “the BCA have been caught stuffing yellow sticky tape down their pants”.
“They have been caught out making big public statements and representations to Senators without any evidence to back these up, in fact the evidence now shows there narrative is just spin”.
Finance Minister Mathias Cormann played down the survey which was never released.
He said CEOs had subsequently pledged to Senators to invest proceeds of the tax cut in the business and, by extension, boost employment and wages.
“What matters is what they do,” he said.
“This is the whole point. The businesses will want to maximise their profits, of course, but if businesses have to hire people, they will have to pay what the market needs them to pay, and if there’s increased competition for workers, business will have to pay more to secure the services of those workers. That is the way the market works.”
Labor has established a Senate committee hearing to test claims by business leaders about the benefits of company tax cuts.
The BCA and 10 CEOs issued a joint statement last week committing to invest, create jobs and boost wages if the cuts were approved by parliament.
The signatories included BHP, EnergyAustralia, Fortescue Metals, JBS Australia, MYOB, Origin Energy, Qantas, Wesfarmers and Woodside.
The Senate inquiry will look at the companies’ wage growth and employment estimates, while also asking them to detail how much tax they have paid in the past five years and the expected tax benefit if the cuts are enacted.
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