Leave tax cuts alone, Hinch tells Shorten

Derryn Hinch has urged Labor not to wind back already legislated tax cuts.

Senator Derryn Hinch. Picture: AAP

Derryn Hinch, the Senate crossbencher blocking the government’s corporate tax cuts in the upper house, has urged Labor not to wind back the already legislated tax cuts for businesses with a turnover of up to $50 million.

Under the first phase of the government’s enterprise tax plan, passed by parliament last year, companies with a turnover of up to $50m are due to receive a tax cut on July 1, with their rate reduced from 30 per cent to 27.5 per cent.

While this would give relief to about 15,000 companies employing 1.13 million workers, Bill Shorten is supporting relief only for companies with a turnover of up to $2m.

The Australian understands Labor is considering backing tax cuts for companies with a turnover of up to $10m but has made no final decision as it consults the Parliamentary Budget Office.

Adoption of the $10m threshold would still require a future Labor government to rescind cuts for thousands of businesses with a turnover between $10m and $50m.

 

This has exacerbated fears in the business community that business owners will not treat the tax relief due on July 1 as a real cut, with chief executive of Master Grocers Australia Jos De Bruin warning against any “shifting of the goalposts” on tax policy.

“Reducing company tax for companies of up to $50m is terrific,” he said. “They will do their best to either create new employment or reinvest back into their businesses.

“If there is a company tax break it will certainly help those small to medium-sized businesses to stay afloat in some cases”.

Senator Hinch believes Labor is “softening” its stance and could move to a higher turnover ceiling of $10m.

“I think they should let the $50m stand,” he said.

Treasury data obtained by The Australian also shows the impact of unwinding the tax cuts would be felt right around the country.

It shows there are 6130 business in NSW, 3856 business in Victoria, 2639 businesses in Queensland, 1536 businesses in Western Australia, 747 businesses in South Australia and 509 businesses in the ACT, Tasmania and the Northern Territory that have turnovers of between $10m and $50m.

Finance Minister Mathias Cormann told The Australian that Labor’s tax agenda would “hurt the economy, hurt working families and cost jobs”.

“That’s because increasing taxes on business will lead to less investment, lower growth, fewer jobs and lower wages”.

Michael Theodorakis, the co-owner of an IGA supermarket in the ACT suburb of Chapman with a turnover over of between $2m and $10m, said Labor’s corporate tax policy looked like it was “based on the politics of envy”.

While he stands to gain from any Labor decision to lift the ceiling for tax relief to $10m, Mr Theodorakis urged Mr Shorten to go further. “I believe they should accept the already legislated tax cuts for businesses with a turnover of up to $50m because that would mean they have viewed the issue in an economic context, not what appears to be an ideological one,” he told The Australian.