Plan B would not be so taxing on Coalition push

If Senate crossbenchers can be believed, as erratic and populist as most of them are, Scott Morrison’s final round of company tax cuts are as good as dead for the life of this parliament.

The government would argue that that they agreed to $36 billion in cuts for small and medium-sized enterprises last year after saying they wouldn’t, so anything is possible. Privately, no one in government believes they are going to budge for big business.

But defeat may not be such a bad thing for the Treasurer. While the economic argument is and has been overwhelmingly with the government, the politics have been horrendous.

It would appear the public has made up its mind on the issue and is not for turning. But there is potential for the politics to swing the government’s way, if (ironically) Malcolm Turnbull is forced by Labor and the Senate to park the enterprise tax plan until the next election and frame a new narrative around personal income tax cuts.

Many economists and business leaders have believed that the full enterprise tax plan — broadening the tax cuts from SMEs to big business — has been dead in the water for some time.

They have been surprised by the government’s persistence in pushing so hard for so long.

While Morrison would deny that is a plan B strategy, having set a deadline for next month to deal with the legislation, it is not beyond reason to believe it is. The issue will be settled one way or another before the budget. The debate then turns to personal income tax, as a temporary and crude fix for wage growth.

Bill Shorten could be exposed, having had his most potent political argument neutralised. Does he then oppose personal tax relief with more voodoo economics on how the rich will get the lion’s share of a Coalition income tax cut? Or does he cop them and work out later how Labor can pay for them along with all its other promises?

No one will be able to accuse Morrison of not fighting hard enough for the company tax cuts. In fact, he was virtually alone in prosecuting the public case, with Corporate Australia having lost its spine. So there is no prospect of Morrison walking away from company tax cuts. The case for them is compelling and the government’s integrity would be shot if it did.

Parking them until the next election is justifiable considering the next phase of the cuts (up to $100 million) isn’t due to kick in under the ETP until next year, with the rest on a seven-year glide path after that. The overall plan can remain intact.

While putting money back into punters pockets in the meantime, the government can still have a stab at Labor as economic vandals. As economist Chris Richardson said, they will leave $20bn a year in reforms lying in the gutter, with Australian companies consigned to the dark ages of taxation.

All of a sudden Plan B isn’t looking so bad.