Company tax rates are on top of the election campaign agenda today with the release of the Coalition’s promise to cut the rate by 1.5 per cent.
The promise received qualified support from the Federal Government. Treasurer Chris Bowen said it was “a fine ambition”, but queried how it would be accounted for in other revenue measures.
Launching the policy in Adelaide today, Opposition Leader Tony Abbott said the coalition’s plan to cut company tax will boost jobs,
It plans to lower the 30 per cent tax rate to 28.5 per cent from July 1, 2015 – if it wins government on September 7.
“This is very, very good news for the workers of Australia, the businesses of Australia and the people of Australia,” Abbott told reporters on Wednesday.
Implementing the tax cut will cost $5 billion.
Abbott said this will be covered by $17 billion in savings indentified by the opposition.
You might like
“This will result in more economic activity … it will result in more jobs and will ultimately be good for government revenue,” he said.
Asked how it could impact the budget bottom line, the Opposition Leader said the coalition didn’t know what fiscal circumstances it might inherit from the Labor government.
“We think they are going very badly, indeed,” he added.
The overall fiscal position would be better under a coalition government, Mr Abbott said.
“But we don’t know what the starting point will be.”
Earlier today Shadow Treasurer Joe Hockey said Australia needs to be competitive, and axing the carbon and mining taxes on July 1, 2014, and cutting the company tax a year later would do that.
“It gives business that certainty, that stability that they’re crying out for which means they’ll have confidence to create jobs, to have a go and grow the economy,” he told the Nine Network.
He said the Australian company tax rate was five per cent above the global average.
Stay informed, daily
Business groups have been pushing for a cut to the company tax rate to be made an economic and election priority.
At 30 per cent, Australia’s tax rate sits about six percentage points above the average of the Organisation for Economic Co-operation and Development (OECD).
Finance Minister Penny Wong said the only way the opposition could pay for a company tax cut was to cut services or increase the GST.
“This is a company tax cut that can only be funded by more cuts, more cuts to services, jobs, health, education for Australian families – or alternatively an increase in goods and services tax,” she told the Seven network on Wednesday.
“It’s kind of funny they’re putting up company tax and putting it down as well to pay for the rolled gold paid parental leave scheme that Tony Abbott wants to put in place.”
In its “Real Solutions” policy plan, the Coalition has promised to deliver “a modest cut” in company tax, funded from savings in the budget, but at this stage it has offered no other details.
Bowen said the proposed cut was a fine ambition, but pointed out the Coalition blocked Labor’s bid to do just that.
“Of course everybody would like to see a corporate tax cut, but the key question here is, how are they going to pay for it?” Bowen told ABC radio.
Asked if Labor would now match the Coalition’s election promise of a 1.5 percentage point cut he said, “No”.
“Labor did try to introduce a corporate tax cut and the Liberal Party opposed it,” he said.
“They’re now promising it as a great step forward.”
