Labor has signalled it won’t support the company tax cut announced in last night’s budget, arguing only small businesses with less than $2 million in turnover deserve corporate tax relief.
The 2016 budget revealed small and medium businesses turning over up to $10 million will pay a company tax rate of 27.5%, down from the usual 30%, in a bid to get fast-growing businesses to employ more people.
The policy follows the 1.5% tax cut for incorporated businesses with an annual turnover of up to $2 million in last year’s budget.
Last night’s announcement is part of a broader plan to eventually cut the company tax rate to 25% within 10 years.
The business community has applauded the move, however, shadow treasurer Chris Bowen says big companies should not be getting a tax cut.
Speaking on Sky News last night, Bowen said Labor supports lowering the corporate tax rate for small businesses but opposes cutting company tax for all businesses.
“We will back a small business tax cut, we back taking the tax rate for small business for 28.5% to 27.5%,” Bowen said.
“Small business deserves that and that’s fair enough.”
When asked what he thinks constitutes a small business, Bowen said a small business is one that turns over less than $2 million.
“That is a small business, that is the accepted definition,” Bowen said.
“Now you know what Malcolm Turnbull and Scott Morrison’s definition of a small business is? A small business is a business with a turnover of less than a billion dollars under their definition … they’re saying they get the small business tax rate.”
Newspoll has Labor currently leading the Coalition 51% to 49% based on the preference flows from the 2013 election.
Shadow small business minister Michelle Rowland told SmartCompany last night’s budget measures are a “tax cut for big business by stealth”.
“Other big issues small businesses consistently raise with me, such as access to affordable, fast broadband, have simply gone unnoticed in this budget,” Rowland says.
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“Now is not the time for a big business tax cut.”
The Greens have also criticised the prospect of giving big business a tax cut.
Greens spokesperson for small business, Senator Nick McKim, told SmartCompany small businesses will lose their competitive advantage if big corporates also get a tax cut.
“The Greens believe there are more practical ways to help small business,” McKim says.
“For example, we are proposing much greater government investment in stimulating renewable energy which would provide massive opportunities for small business, and we will be announcing more during the election campaign.”