The business lobby is chomping at the bit for even more company tax cuts after the Senate passed a $24 billion package targeting small and medium companies.
Businesses with turnovers under $50 million are set to get tax relief following a last-minute deal between the Turnbull government and Nick Xenophon Team which passed the Senate on Friday night.
In any case, the government did not get what it really wanted – a cut for all-sized businesses at a cost to the budget of $50 billion.
Instead, the amended package will cost $24 billion to 2026/2027 or $5.2 billion over the next four years.
The government’s bargaining chips included a one-off payment to help welfare recipients cover their power bills worth a total of $260 million and a rethink on electricity and gas policy.
Prime Minister Malcolm Turnbull said the result was a “stimulus to growth and employment”, and a great day for Australian workers and businesses.
Business Council chief executive Jennifer Westacott characterised it as a historic step towards rebooting Australia’s international competitiveness but warned politicians the job is not done.
“Any politician can run from difficult reform, but it takes real leadership to stick to your guns, stare down your opponents and do what’s right for the country,” she said.
Australian Industry Group chief executive Innes Willox argued the government had to address the scepticism about the merits and fairness of the measures.
“A more competitive tax system nevertheless remains a critical element in the efforts needed to build a stronger and more successful economy that is capable of supporting the broader aspirations of the Australian community,” he said.
Courtney Joe is the owner of Sydney Removal Services.
He told SBS News he would rather pay the full 30 per cent tax rate, and have the government ensure his competitors do the same.
“That two-and-a-half per cent could be probably better spent on say auditors,” he said.
“If we had a bigger piece of the pie, if they were getting rid of cash operators, we would definitely employ more people.”
Senator Xenophon said it was important to link the company tax cuts to energy policy because “energy prices are crippling Australian businesses”.
Labor senator Sam Dastyari said NXT had been sold a pup.
“It’s a bunch of reviews – a few things the government had to do anyway,” he said.
Greens senator Sarah Hanson-Young said it was a disappointing for South Australia.
“Billions of dollars that should have gone to our schools and hospitals in South Australia have just been funnelled straight into the pockets of big business, thanks to Nick Xenophon,” Senator Hanson-Young said.
How the tax cuts will be phased in:
– Companies with a turnover of less than $10 million will receive a reduction in their tax rate to 27.5 per cent this financial year.
– In 2017/18, it will be up to a $25 million turnover.
– In 2018/19, it will be up to a $50 million turnover.
– The tax rate will progressively reduce to 25 per cent.