The Government’s much-hyped company tax cuts have been dumped, but Treasurer Wayne Swan has blamed the Opposition for blocking the cuts and forcing the Government to “redirect” the funds to families.
The Government will save just under $4.8 billion over the next four years by dumping the cuts, which would have seen the company tax rate fall from 30% to 29% from July for businesses with less than $2 million in revenue, and for all businesses in July 2013.
The tax reductions were sold by the Government as the key way which the business community would share in the cash raised by the Government’s mining tax.
But they had been bitterly opposed by the Opposition – which acted against the entire mining tax and anything to do with it – and the Greens, which wanted the cut for large businesses scrapped altogether.
Not surprisingly, the Government has pointed the finger at the Opposition for its decision not to proceed with the cuts.
“Our company tax cut has been rejected in full by the Liberals and Nationals, and in part by the Greens,” Swan said in his Budget speech.
“We will not allow this parliamentary gridlock to deny Australians the benefits they deserve. So in this Budget the funds for company tax cuts have been redirected to families in a way that also helps the economy, including small businesses.”
Swan has tried to sell the Government’s new loss carry-back proposal as compensation, but this will be of little comfort to the majority of business owners and leaders, particularly those in medium and large businesses.
The decision to dump the company tax cut is the single biggest saving in Swan’s fifth Budget, which delivers a surplus of just $1.5 billion by slashing $32.6 billion over the next four years.
However, Swan has left open the possibility the cuts could be put back on the table if his Business Tax Working Group recommends the move – and can find the savings to pay for it.
“We wanted to do more for business with a company tax cut but the Opposition’s negative tactics have prevented that tax cut flowing,” Swan said in his Budget speech.
“So my message tonight to businesses large and small is we are providing help now through the measures I have just described.
“And we will keep working with you to seek consensus on proposals from the Business Tax Working Group later this year.”