The great company tax cut swindle
This week has been all about company tax, starting off with the Federal Government’s announcement that it will collect company tax payments on a monthly basis and ending with the Business Tax Working Group’s failure to find any way to deliver the government’s long-promised company tax cut.
While the move to monthly payments doesn’t directly affect small business, it is bound to have a trickle-down effect which will have serious cashflow implications for many businesses.
As for the company tax cut, it was first promised by the government as part of its mining tax package but was dumped in the May federal budget when the Opposition and Greens blocked it.
Then came the salvo that the Business Tax Working Group would go away to try to make it happen.
Now the working group has come up empty-handed, which appears to be no surprise to anyone at all.
Sadly, the working group was doomed to failure from the start by the terms of reference of its report, which required any cut to be funded by increasing or broadening other business taxes.
While Treasurer Wayne Swan has said the offer for business to fund its own tax cut remained on the table, without cutting much-needed research and development funds there is nowhere for business to go to get the money.
Just like the debate about a republic for Australia was put on the backburner for years by an ill-fated referendum, the failure of the Business Tax Working Group signals the death knell for any company tax cut in the foreseeable future.
Paul Drum from CPA Australia conceded as much when he told SmartCompany yesterday that the Business Tax Working Group’s report signals the end of a chapter and said a new round of lobbying would have to commence.
By chasing its budget surplus at all costs the government has left itself with nowhere to go and business is lumped with a company tax rate which is now higher than the majority of OECD countries.
What’s more, it’s forcing business to cough up on a monthly basis just to shift some figures from one financial year to another in a glorified accounting trick.