Malcolm Turnbull has vowed to take his company tax cuts to the next election if necessary, as the government faces a tough battle with the Senate to pass the remainder of the $65 billion package.
After legislation for the remainder of the cuts passed the House of Representatives, Mr Turnbull said he intended to secure Senate support this term. But if not, he said he was prepared to take the fight up the Labor leader Bill Shorten at the election.
“We will fight him here and we will fight him at the next election on a platform that supports Australian business, Australian investment, Australian exports, and Australian jobs, the jobs that he has abandoned,” Mr Turnbull said.
Treasurer Scott Morrison concurred, saying the tax cuts would be even more important at the next election given other countries were continuing to lower their rates.
“They were necessary at the last election and they will be even more so at the next election as the rest of the world continues to cut their taxes on business.”
Current prospects for the legislation in the Senate are bleak, especially after One Nation declared it, too, was opposed.
To pass the Senate, the legislation, which will lower the company tax rate for all corporations from 30 per cent to 25 per cent by 2026-27, needs nine of the 12 crossbench votes. Thus far, the government has the stated support of just three – Cory Bernardi, Fraser Anning and David Leyonhjelm.
New Senator Steve Martin is undecided, Derryn Hinch said he was examining a proposal to support the cuts in return for business giving workers a pay rise. The government has ruled out going down this path.
The three Nick Xenophon Team Senators remain opposed and Senator Pauline Hanson, who had previously been favourable to the cuts, spoke strongly against them in Parliament in response to motion put forward by Senator Bernardi.
One Nation, which has three senators, supported the previous legislation which granted a tax cut to companies with turnovers capped at $50 million but would not be supporting the remainder of the package.
“Does (Senator Bernardi) realise a lower tax rate equals lower franking credits and less money in the hands of self-funded retirees and those saving for the future?,” Senator Hanson said.
“One Nation has already supported tax rate cuts for businesses with a turnover of up to $50 million, but I draw the line at that. What we need are incentives for businesses to invest in Australia and tax rate cuts are not the answer.”
She dismissed comparisons with the US where the company tax rate has just been slashed to 21 per cent.
“A tax rate comparison between countries is ridiculous when the new system in America restricts deductions but in Australia deductions are unlimited,” she said.
“The new company tax system in America provides huge incentives in terms of capital write-offs to encourage things to be made in America.”
Wrapping up debate just before the lower house passed the legislation by 75 votes to 71 votes, Mr Morrison rounded on Labor which, he said, would “create a glass ceiling on business growth”.
“Whether they changed their mind, whether they ever believed it in the first place, whether they lost their way, I’ll let the Australian people decide.”
“We’re sticking with this plan because we know it’s in the economic interests of Australia,” he said, adding it would lead to more and better paid jobs.
Senator Hanson disagreed with the suggestion that failure to lower business income tax rates would render Australia uncompetitive.
“Foreign-owned multinationals don’t consider corporate income tax rates in their investment decisions, because they don’t expect to pay any tax in Australia,” she said.
“It is just too easy to contrive a paper loss or a non-taxable income. Lowering business income tax rates will not make Australia an attractive destination for investment unless government delivers globally competitive electricity and gas prices.
“We also need labour reform. We have a $600 billion debt and no prospect of paying it back because this government and the previous Labor government have no appetite to collect tax from foreign-owned multinationals which often pay more in political donations than they do in corporate income tax.”
Business Insider Emails & Alerts
Site highlights each day to your inbox.