Will there be a company tax cut for anyone? Business groups slam Greens’ threat to block legislation supporting cuts

The business community is furious at the possibility company tax cuts may not be passed at all, after the Greens said they would block any attempt by the Federal Government to merge both the small and big business cuts into a single piece of legislation.

The Greens have continued to oppose the reduction in the company tax rate from 30% to 29% saying they are prepared to talk about changes to the definition of small business, but they won’t pass any move that will give larger businesses relief.

“We’re a political football in all of this,” Council of Small Business of Australia chief executive Peter Strong told SmartCompany this morning.

“The silly thing is the big companies are only a small percentage of businesses in Australia. And they control far too much of the agenda on this issue.”

Australian Chamber of Commerce and Industry chief executive Peter Anderson also said this morning the tax cut legislation is now in “a very unsatisfactory position”.

“The Government has allowed the Parliament to vote up the mining tax but has not linked that to company tax reductions. This was a major error.”

Greens leader Bob Brown told the Australian Financial Review this morning the party would block all tax cuts if the Government took an “all or nothing” approach that combines the cuts for big business with the small business legislation.

“In the coming couple of months, the company tax cut is going to be widely debated,” he said.

“There’s going to be a stoush between Labor and the Opposition and we are making the point that our position has been consistent.”

Brown also said the party has abandoned an idea to raise the small business threshold to $5 million, but it is considering an idea to raise the instant tax-write off level from $6500 to $10,000.

The Government has been forced into a difficult position, saying it doesn’t want to operate two company tax structures in the long-term. The business community continues to place pressure on the Government to pass the tax cuts, promised as a trade-off with the mining tax.

And small businesses are concerned their own tax cut – set to be passed for the 2012-13 year – won’t pass and, if it does, will only help out a third of all companies.

“We will continue to fight for this in the Senate and I think the business community is going to put pressure on [Opposition Leader] Tony Abbott,” Treasurer Wayne Swan told ABC Radio this morning.

The Opposition continues to oppose any and all tax cuts associated with the mining tax, prompting Prime Minister Julia Gillard yesterday to say Tony Abbott is “now so negative that he will say no to things that are part of the Liberal Party’s brand”.

Peter Anderson told SmartCompany this morning the Government needs to stop playing politics with a business issue.

“The Government has made a big error in strategy by allowing this to be separately debated, and it means the Greens can play politics with this.”

“This is no longer a matter between Government and the business community, it’s a political matter, and one that doesn’t give the industry any confidence whatsoever.”

COSBOA chief executive Peter Strong said the argument the Government can’t operate two separate company tax rates doesn’t hold water as, he says, they were prepared to do that anyway.

“We already have two systems operating, one for small business and one for large, and it’s about time we recognise that.”

“If we don’t have two systems, why do we have a definition of small business? One system works for big business, the other works for small, and we should acknowledge it.”


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