Budget 2016: Labor opposes cutting corporate tax, except for SMEs turning over less than $2 million

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.

“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.”

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Rohan
Rohan
4 years ago

Since when has a business turning over up to $10m pa been classed as big business? Bowen, that fungus growing on your face has seeped into your brain.

In terms of the Greens, well that party is just Marxist Central. Senator McKim Jong Il is a prime example.

BORIS
BORIS
4 years ago

How our of touch is Chris Bowen and Labor with Small Business. There are many SME’s who turn over $2 – $10 million….. they are Restaurants; Independent Supermarkets; Service Stations; Manufacturers; Pharmacies Etc, Etc all run my families as closely held private companies. They are the ones who are the “backbone of the economy” as Bowen has said on numerous occasions. They are the ones starved of cash to expand and put on more staff which is what this policy will do. No unionists in those businesses so its thumbs down from Labor. No surprises there…………

David Langworthy
David Langworthy
4 years ago

Clearly Bowen and Labour have no idea or know what a small business does or who it employs, small business is the creator of wealth and a significant employer and job creator, businesses turning over $2 million are micro business, not large employers nor real wealth creators, small business has to put up with payroll tax, unfair dismissal laws, collect GST and face unyielding government interference put in place by people like Bowen.
Nobody protects an employer when an employee after 10 years service resign, however if a small business terminates an individual for dishonesty. that small business must justify it’s decision when that employee claims that termination was unfair, Fairwork kicks in and despite evidence puts the employer through the ringer.
I am 69 years of age and history has taught me that Labour is terrible for business and terrible for the country, I see nothing with Bowen and the current Labour that changes my mind, they clearly have no idea what a small business contributes to our country.

Bill
Bill
4 years ago

Yeah right! Good on ya Greens Senator. Cant wait for my small business to just leap into the stratosphere when you blokes bring in the renewable energy investment! What an absolute joke! My small business turns over 2.4 mill per year. I am sick to death of forking out money to hand wringing politicians so they can stand up on their soapbox and just GIVE all my hard earned money away. You look good, you get clapped by all the people who contribute very little to the economy and my brow is just covered with a bit more sweat!

R R
R R
4 years ago

I can’t understand how a business with $10M turnover is big. Labor must think all that money is going to the owner. Someone should teach them about expenses, cost of compliance, competition with real big business, and risk, which the owner should be duly rewarded for. Furthermore, the cost of failure is terrible for small business. Whilst politicians leave a mess for which they are not held accountable.