Federal budget 2018: business breaks may exceed $80bn, says Eslake

Economist Saul Eslake suggested an updated 10-year costing of Coalition corporate tax cuts could exceed $80 billion by 2029.

Bill Shorten in question time yesterday. Picture: AAP

Leading economist Saul Eslake has suggested an updated 10-year costing of the Coalition’s corporate tax cuts could show the measure exceeding $80 billion by 2029.

Bill Shorten yesterday challenged Malcolm Turnbull to say whether an updated 10-year costing would exceed $100bn, with the Prime Minister arguing it would depend on the future profitability of the corporate sector. “Asking what company tax receipts will be 10 years from now is effectively asking what will be the profitability of the corporate sector 10 years from now?” Mr Turnbull said.

The Opposition Leader used question time yesterday to grill Mr Turnbull and Scott Morrison on the revenue hit from the corporate tax cuts out to 2028-29.

The full corporate tax cuts being proposed by the Coalition are scheduled to come into effect in 2026-27 when all companies, ­regardless of turnover, are due to receive the lower 25 per cent rate.

The government confirmed last year, under questioning from Labor, that the total cost of the corporate tax package over the decade — (the period from 2016-17 to 2027-28) — amounted to $65.4bn.

Labor believes the cost over the 10 years to 2028-29 is certain to be higher than that because it includes a period over which all companies will have been paying the lower corporate rate of 25 per cent for one year longer.

Mr Eslake, a critic of the company tax cut package, suggested the cost could exceed $80bn, given the rise in company tax collections reflected in Tuesday’s budget.

“They have been very ­conservative about the future increase in company tax collections in revenue after this year ... (but) you are right to say the cost of the company tax cuts might be even higher.”