Former Treasurer, Peter Costello, is the latest commentator to question the Turnbull Government’s company tax cut policy, which has been heavily backed by the Business Council of Australia (BCA), claiming the policy lacks funding, balance or coherency. From The AFR:
“You know, everybody’s looking back at the tax debate and saying, ‘Why, why didn’t the tax debate get legs?’, Mr Costello said. “I’m not really sure that the BCA had a good tax policy.
” It wasn’t their case to persuade the public, but it was their case to come up with a good tax policy. And I’ve got to say to you I’m not entirely clear what it was”…
“Is that a comprehensive policy?” Mr Costello said. “Well, company tax, whoopee do. Good luck to you. What else is there?
“This has got to be funded. It has got to be balanced. It has got to be part of an overall sweep. You can’t just say, ‘Oh, I’ll do that,’ and that’s sufficient”.
Costello is the second Liberal Party elder to question the merits of cutting company taxes. Back in June, former leader John Hewson said that the Turnbull Government needed to provide more evidence to prove that the tax cuts would boost investment and benefit Australians:
“There is obviously a debate always about when you cut taxes where the benefits go… There is a suggestion of course that a company tax cut goes predominantly to multinational corporations who may not contribute anything more to Australia. They may not employ more Australians, they may not invest.
The world hasn’t seen a significant pick-up in investment despite the fact that we have had near zero interest rates in most developed countries. So is it tax that is going to make a difference to that? I’m not sure, I think it’s a bigger issue.
It does go to foreign shareholders. But the assumption is that those companies operating in Australia will expand their investment and they will employ people. That needs much more debate and evidence”…
They are also just two of a veritable conga-line of commentators that have questioned the Coalition’s company tax cut policy. Others include:
- The Grattan Institute
- The Australia Institute
- Goldman Sachs
- ABC’s investigative reporter Stephen Long
- Fairfax writers Peter Martin, Ross Gittins, Michael Pascoe, and Mark Kenny
- the University of Technology Sydney
- Victoria University senior research fellow, Janine Dixon
- The Australian people
With the Federal Budget facing immense structural pressures and a “revenue problem” – as acknowledged by Treasurer Scott Morrison in his recent speech – there was never any sense in gifting tens-of-billions of dollars to foreign owners/shareholders, and in the process worsening the Budget position and lowering national income.
It all looks academic, anyway, with Team Nick Xenophon set to vote against progressively reducing the company tax rate to 25% over 10 years, thus scuttling the policy in the Senate. From The AFR:
The government needs nine of the 11 Senate crossbenchers to pass its 10-year enterprise tax plan but with the Nick Xenophon Team comprising three of those votes, there can be no deal.
The Greens oppose the cuts outright and Labor will support a tax reduction for a company with a turnover capped at only $2 million.
While Treasurer Scott Morrison is still negotiating with the crossbenchers, Senator Xenophon told The Australian Financial Review his mind was made up and the party would not budge.
