Coalition tax plan will deliver $5bn in cuts to small business over two years

Josh Frydenberg will attempt to reignite an election battle with Labor over tax, with Treasury analysis showing his tax plan will deliver $5bn in cuts to small business.

Josh Frydenberg says ‘Australians know that under Labor they will always be taxed more’. Picture: Andrew Henshaw

Josh Frydenberg will attempt to reignite an election battle with Labor over tax policy, with new Treasury analysis showing the Coalition’s tax plan will deliver $5bn in cuts to small business over the next two years.

It comes as shadow treasurer Jim Chalmers on Sunday refused to be drawn on the opposition’s broader tax plans other than to confirm Labor’s priority would be multinational taxes.

The Treasurer on Monday will release previously unpublished Treasury analysis showing small businesses would be more than $2.5bn better off in 2021-22 and $2.4bn in 2022-23.

This would increase to $3.5bn in 2023-24 as a result of tax cuts and the investment incentives the government is providing to small business.

Mr Frydenberg boasted that since the Coalition’s company tax cuts commenced in 2017-18, more than $17bn in tax cuts had been provided to small ­business.

He accused Labor of refusing to rule out new taxes, including a $27bn tax grab on discretionary trusts.

“Australians know that under Labor they will always be taxed more,” Mr Frydenberg said.

“Labor are addicted to higher taxes.

Shadow Treasurer Jim Chalmers says Labor’s focus will be on multinationals but did not rule out a broader suite of taxes. Picture: Caitlan Charles

“At the last election, Labor was promising $387bn in higher taxes and they have learned nothing since then.

“Hitting small family businesses with a new tax, just as they are recovering from the greatest economic shock since the Great Depression, shows that Labor can’t be trusted to manage the economy.

“Only the Coalition can be trusted to deliver lower taxes and we have the record to prove it.

“Whether it’s tax cuts we have delivered for 11.5 million Australians or 3.6 million small businesses, we are rewarding ­aspiration by enabling Australians to keep more of what they earn.”

Mr Chalmers on Sunday said Labor’s focus would be on multinationals but would not rule out a broader suite of taxes.

“We haven’t finalised our full suite, as you would appreciate,” Mr Chalmers told the ABC ­Insiders program.

“There is still at least two budget updates between now and the election – we’ve got the mid-year update in December; the government says they’ll do another budget; then we’ll also have the pre-election update after that.

“So it makes sense to maintain some flexibility on our final set of policies.

“We’ve said repeatedly that we won’t take an identical agenda on tax or anything that we took to the last election to the next election.”

When asked about discretionary trusts, which Mr Frydenberg said would unfairly hit small family businesses, Mr Chalmers would not be drawn.

Mr Frydenberg said the Treasury analysis showed that an average small business with a turnover of $1m had enjoyed tax cuts of $40,000 in 2020-21 and would pay $50,000 less in tax in 2021-22.

He said that over the seven years since the Coalition’s company tax cuts had been brought in – and which had brought the corporate tax rate down for small to medium-sized business from 30 per cent to 25 per cent – the average business had paid about $190,000 less in tax.

He said the data showed that since the peak of the pandemic in April 2020 to the end of September 2021 small businesses – those with less than 20 employees – had been responsible for the creation of more than 300,000 jobs, while medium-sized businesses had generated a further 300,000 jobs.

The government’s attempt to ramp up a political scare campaign over tax is part of a continuous effort by the Coalition to portray Labor as high taxing. Labor refused to get suckered in last year after confirming it would not seek to repeal the government’s personal income tax plan if elected.