Big business and high income earners look set to be the initial winners of the Turnbull government’s tax reform package.
The corporate tax rate for large businesses is 30%, while it was cut to 28.5% for small business in the last budget.
There are suggestions coming out of Canberra that the government is considering an across the board 28.5% company tax rate as part of its long-awaited tax reform package, giving a boost to the top end of town but no new impetus for small businesses.
Cabinet Secretary Arthur Sinodinos says cutting personal income taxes encourages hard work and boosts spending but cutting the corporate tax rate has positive effects on the whole economy.
He says there are a lot of studies that show it can encourage investment, higher productivity, more investment from overseas, and stronger economic growth.
‘At least 50% of the impact of cutting company taxes goes in higher wages for workers and higher employment,’ Senator Sinodinos told ABC television on Sunday.
Treasurer Scott Morrison conceded that the government would reduce the tax burden ‘wherever we can’ last week, while confirming that the 2% deficit levy imposed on high income earners by former treasurer Joe Hockey would be removed in 2017.
But shadow treasurer Chris Bowen said this is just more talk from a government of no action.
He said the Liberal Party had previously voted against company tax cuts when Labor was in power and even criticised the opposition when it aspired to bring down company tax further.
‘The Australian people are tiring of more talk,’ he said.