Labor committed to 5% small business tax cut as Turnbull’s first budget looms

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Source: Supplied

Labor remains committed to a 5% cut to corporate tax for small businesses and has challenged the federal government to lend bipartisan support to the measure in the lead-up to Malcolm Turnbull’s first budget.

Opposition leader Bill Shorten proposed reducing the corporate tax rate for small businesses from 30% to 25% in last year’s budget reply speech.

Shorten’s proposal is still “on the table”, according to Shadow Small Business Minister Michelle Rowland.

“The way he [Shorten] phrased it was that this should be a bipartisan target,” Rowland says.

“So Labor is very open to engaging with the government on how we can achieve this. We don’t have much confirmation at the moment, though, on whether the government is interested in pursuing that.”

“Its tax reform agenda would need to include that and we would examine it very closely … but all the signs at the moment are big tax reform is not going to happen before the next election.”

The Coalition included a 1.5% small business tax cut in its 2015 budget.

The 28.5% tax rate for small business came into effect on July 1, 2015, and applies to incorporated small businesses with annual turnover of under $2 million. Small unincorporated businesses received a “tax discount” capped at $1000 per taxpayer.

However, the Turnbull government has not yet indicated whether it is willing to embrace a further cut or one that applies to a larger number of SMEs.

Last month the government backed away from reforming the goods and services tax, with Treasurer Scott Morrison indicating any tax reform before the next election will be mild as a result.

In addition, Canberra is rife with speculation the government could bring the budget forward by a week and call an early double dissolution election.

Rowland says small businesses deserve more certainty from all sides of politics.

“The feedback I get from the electorate is people want us to get on with the job,” Rowland says.

“They want government to pursue common goals and we think this is a very valid one. The message I get time and time again is they [small business owners] don’t see a plan from this government. They want some direction.”

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Broede Carmody is SmartCompany's senior reporter. Previously, he was a co-editor of RMIT University's student magazine Catalyst.

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