Company tax rates showdown will begin in the Senate today
THE Turnbull government faces an uphill battle to pass its 10-year corporate tax plan as debate begins in the Senate today.
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DEBATE begins on the Turnbull government’s 10-year corporate tax plan in the Senate today but it is unclear how much of it will get through or what mechanism will be used if it needs to be split.
Independent senator David Leyonhjelm says the Government is considering whether to accept a proposal to limit tax relief for companies with an annual turnover of up to $10 million.
Senator Leyonhjelm backs a proposal for tax relief for firms with a turnover of up to $50 million, as does senator Cory Bernardi and One Nation’s four senators, but other crossbenchers are refusing to budge.
“$50 million is much more likely to generate jobs,” Senator Leyonhjelm said this morning.
“A $10 million ceiling will generate a few but nowhere near the impact of $50 million.”
Treasurer Scott Morrison wants the package, that aims to incrementally cut the corporate tax rate to 25 per cent over next decade, dealt with this week, saying the government wants it passed in full.
With Labor sticking to its opposition to a broad tax cut and limiting the reduction to 27.5 per cent for firms with a turnover of $2 million or less, the government needs the support of the fractured crossbench.
RELATED: Workers miss out due to high business tax, Turnbull says
Senator Nick Xenophon’s three NXT senators will back a reduction for businesses with a $10 million turnover, as will independent Derryn Hinch, while Tasmania’s Jacqui Lambie has said she will back a cut for “small business”.
Under the initial stages of the plan, the corporate rate drops to 27.5 per cent for businesses with a turnover of $10 million this financial year.
It then reduces to that rate for those with a $25 million turnover in 2017-18 and $50 million in 2018-19.
By 2026-27 all businesses would pay 25 per cent.
At the moment, corporations pay 30 per cent apart from those with $2 million or less turnover, which pay 28.5 per cent.
New research by Deloitte Access Economics warns inaction in making Australia’s tax system more competitive would have a significant impact on the mining sector and the billions of dollars and thousands of jobs it creates.
The report prepared for the Minerals Council of Australia says Australia’s 30 per cent corporate tax rate is higher than OECD countries with significant mining activity, such as Canada (26.7 per cent) and Chile (24 per cent).
“This higher taxation rate, in turn, lowers returns on foreign investment in mining, which can influence the decision-making of foreign investors determining where to invest capital,” the report says.
Originally published as Company tax rates showdown will begin in the Senate today
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