Big business tax cuts a non-starter
You can’t cut tax for companies paying zero
While the #Barnababy saga morphs into #beetrooter and then dissolves into same-old #leadershit, the government is not only being distracted from prosecuting the case for company tax cuts, it is losing it.
Last week, One Nation declared it would oppose the second tranche of cuts in the Enterprise Tax Plan for businesses with turnover exceeding $50 million, effectively quashing the government’s chances of getting the legislation through the Senate this parliamentary term. The government seems to think there is political mileage in bludgeoning Labor over and over because it opposed company cuts for big business. I’m not sure why.
Today the ABC’s chief economics correspondent Emma Alberici published exclusive analysis showing that about one in five of Australia’s top companies has paid zero tax in three years. Companies identified include Qantas, which hasn’t paid tax for almost a decade, ditto EnergyAustralia; a string of household names including News Corp, Atlassian and Lend Lease are also revealed to have not paid tax for at least a year. Alberici’s accompanying commentary concludes there is no case for a corporate tax cut when one in five of Australia’s top companies don’t pay it.
Alberici’s right. Her analysis simply confirms what we already knew. A December dump by the ATO showed that 732 companies paid no tax in 2015–16. Stalwart investigative reporter Michael West has published a stinging series of articles naming and shaming tax avoiders, including this piece that names News Australia Holdings, Goldman Sachs, two Glencore companies and others, and says that around third of the biggest companies in Australia pay no tax.
In Question Time today the prime minister called the Alberici report “confused” and simply launched into the ABC: “There’s an enterprise that understands profit and loss! ... the ABC has the same understanding of the commercial world as the Opposition.” More shooting the messenger.
Treasurer Scott Morrison cited estimates by Deloitte Access Economics’ Chris Richardson, reported in the AFR today [$], that abandoning the big business tax cuts meant that Australia would miss out on a $20 billion economic windfall every year, based on Treasury modelling that anticipated a one per cent increase in GDP as a result of the Coalition tax plan. That modelling was unpicked by Fairfax Media’s Peter Martin here and the ABC’s Stephen Long here.
The PM and Treasurer Scott Morrison are convinced, but they are not convincing: it is not commonsense to argue that if companies pay less tax to the government, they will necessarily pay more to their workers. In fact, company management is very likely to decide to distribute extra profits to shareholders, which is what is happening in the US, and which Rio Tinto has done as well, and as Crikey’s Bernard Keane has written repeatedly, including here and here [$].
When he was a humble backbencher, Turnbull got up the nose of then treasurer Peter Costello by developing and promoting his own tax policy. The guts of it was to eliminate loopholes, broaden the tax base and lower headline tax rates. On that, if nothing else, he has been consistent. But the eliminating loopholes bit has to come first. The public will not support company tax cuts while so many companies are not paying tax. The “left-leaning” Australia Institute asked voters, “dollar for dollar, what is a better way to promote jobs and growth?” To which 65 per cent of voters –across all parties, including Coalition supporters – said they preferred funding health, education and other public services, while only 15 per cent supported cutting company tax.
Tax cuts for small business are one thing, but tax cuts for big business are a non-starter. Let’s move on.
since this morning
In an interview with Sky News, deputy Nationals leader Bridget McKenzie has given a “rolled-gold guarantee” that the party room will not dump Barnaby Joyce as leader. This morning, News Corp columnist Miranda Devine wrote that a backlash against a “sanctimonious left-wing pile-on” could save him.
Queensland Electoral Commissioner Walter van der Merwe has resigned [$], two days after the state government asked him to show cause as to why he should not be sacked.
in case you missed it
Several major Christian churches have recommended a Religious Freedom Act to Philip Ruddock’s review of religious freedom, which would codify and expand the exemptions to anti-discrimination laws currently extended to churches when it comes to hiring and firing.
The SMH reports that Australian casino billionaire James Packer will not face charges over his role in the corruption scandal engulfing Israel’s prime minister, Benjamin Netanyahu.
The AFR reports [$] that tomorrow’s labour force data could prove former PM Tony Abbott right in his prediction that the first five years of Coalition government would deliver one million new jobs.
Paddy Manning is a contributing editor (politics) at The Monthly. He is a writer and journalist who has worked for the ABC, Fairfax, Crikey and the Australian. He is also the author of three books, including Boganaire: The rise and fall of Nathan Tinkler.
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