After a not so restful summer break, our political leaders are back on deck this week, with Prime Minister Malcolm Turnbull and Opposition Leader Bill Shorten putting forward their views on tax reform, productivity and business growth.
Today the Prime Minister will tell the National Press Club his plan to cut the corporate tax rate will make the average worker $750 a year better off, with the government to call on employers to invest back into their staff and companies.
“If we had a 25% business tax rate today, full time workers on average weekly earnings would have an extra $750 in their pockets each and every year,” he will say, according to Fairfax.
The first stage of the Coalition’s 10-year enterprise tax reform plan would involve cutting company tax to 27.5% for businesses with up to $10 million turnover, and while the government looks to have the support of the Senate for that part the plan, it is facing criticism from the opposition and from some experts who doubt it will necessarily lead to growth for SMEs.
Labor is opposed to the Coalition’s plan to scale the company tax rate back to 25% for all businesses by 2026, and last year opposition leader Bill Shorten drew parallels between the plan and US President Donald Trump’s approach to tax reform.
At the end of 2016, Michael Stapleton from the Association of Virtual CFOs wrote in SmartCompany that given the funding needed for SMEs to properly invest in growth, a cut in the corporate tax rate would unlikely be solely responsible for powering small business forward in the long term.
“The tax cuts as proposed are not going to go anywhere near helping an owner of a small or medium size business achieve their growth ambitions,” Stapleton said.
In his own speech at the National Press Club yesterday, Bill Shorten said it is essential for government to cut red tape for business and make employment services more friendly to the small business community, as well as ensuring the TAFE system provided properly qualified workers to business.
He also promised Labor would not cut penalty rates or wages, making the Opposition’s position on this issue clear before the forthcoming decision from the Fair Work Commission on Sunday penalty rates.
Business groups have been vocal on issues of tax reform since before the 2016 federal election and its likely the the same issues will dominant discussions leading into the May budget.
Earlier this week the Council of Small Business Australia (COSBOA) released its 2017 Budget priorities, and said while it supports lowering corporate tax rates, the government must develop case studies to show “tax cuts do not give individuals more income but instead create opportunities to develop new jobs”.
The council also welcomes Small Business Minister Michael McCormack’s push to extend the $20,000 small business instant asset write off beyond 2017.
The Business Council of Australia (BCA) has long advocated for cuts to the corporate tax rate and this week the council took its advocacy to social media with a campaign that shows a South Australian bartender worried about job numbers given the high rate of company tax in Australia.
However, critics on Twitter questioned whether the individual pictured in this campaign is genuine. SmartCompany has been told the location and staff member is real and is awaiting further comment from the BCA.
— The Business Council (@BCAcomau) January 31, 2017
Prime Minister Malcolm Turnbull will address the National Press Club at 12:30pm on Wednesday.