Sunday, July 1, 2018
The Australian Government is to postpone a Senate vote on its company tax cuts until after July's by-elections.
Finance Minister Mathias Cormann announced on June 28 that the Government has "decided to defer consideration of the legislation… until after the break." The so-called super Saturday by-elections will take place on July 28.
Cormann said: "Despite our best efforts to secure majority support in the Senate for our proposed business tax cuts, we have not yet been able to secure the necessary support. We need more time to make our argument to our colleagues on the Senate crossbench."
The Government has 30 seats in the Senate but needs 39 votes to pass legislation. Earlier this month it succeeded in carrying a package of income tax reforms but has been trying unsuccessfully for two years to pass its company tax reforms in full.
Last year, the Government cut the small business rate to 27.5 percent and phased in increases in the turnover threshold for access to the rate, which will this year reach AUD50m (USD36.7m). Its fuller Enterprise Tax Plan proposes increasing the SME threshold each year to 2023-24 and reducing the company tax rate to 25 percent for all businesses by 2026-27.
The Labor Party opposes the Enterprise Tax Plan and has pledged to repeal the cuts already legislated.
According to Cormann, July's by-elections "will be a referendum on who has the better plan for a stronger economy and more jobs."
Cormann accused Labor leader Bill Shorten of "making an un-Australian decision to put businesses in Australia at an ongoing disadvantage with businesses in other parts of the world by locking in on an ongoing basis… a higher tax on business."
Jennifer Westacott, Chief Executive of the Business Council of Australia, said she was disappointed the legislation had not been passed. She urged Parliament "to adopt the common sense and fiscally responsible policy to gradually reduce the company tax rate."
"If we fail to grasp this opportunity, we are leaving on the table a policy that will increase the economy by AUD18bn a year in today's dollars, that's an additional AUD180bn over 10 years. This is a vitally needed reform to turbocharge the Australian economy for the benefit of all Australians by enabling businesses to grow, create new jobs, and invest in the future," Westacott added.