Morrison Pushing For Australian Company Tax Cuts
Cutting Australia’s company tax rate is “now an urgent matter,” according to Treasurer Scott Morrison.
In a speech to CEDA, Morrison said that with the UK, France, and the US each seeking to lower their corporate tax rate, Australian businesses risk “becoming stranded on an uncompetitive tax island if we fail to act accordingly.”
Earlier this year, the Government succeeded in passing legislation to phase in both reductions in the small business company tax rate and increases in the turnover threshold for accessing the rate. These changes affect the 2016-17 to 2018-19 tax years.
The Government was however unable to secure parliamentary agreement on its full Enterprise Tax Plan, which included further increases to the SME threshold each year to 2023-24 and a reduction in the tax rate to 25 percent for all businesses by 2026-27. It has reintroduced legislation to this effect, which is currently before the Senate.
Morrison told CEDA that the proposed reforms are expected to “deliver a boost to before-tax real wages of up to 1.2 percent.”
Morrison justified the Government’s plan to phase in the changes over a 10-year period during an interview with 3AW radio. He said that a smaller firm would be “making a decision about what it’s going to invest in, in the next six months,” whereas larger companies “are making decisions over 10, 15, 20 years.”
According to Morrison, the Government is signalling “very clearly” to these larger businesses that “the tax rate will be coming down.” He said this will allow such businesses to “make investments based on the certainty of having those tax arrangements legislated.”
