Company Tax Rate Plan Faces Barriers
Prime Minister Gillard has lashed out at the opposition to her company tax rate plan claiming:
I never thought I would see the day that the Liberal Party would join with the Greens to vote against a tax cut for business
Tony Abbot hit back claiming he too will lower the company tax rate, but without using a mining tax to fund it. He was unspecific on the amount of the reduction, which appear to be a back down on his 1.5% company tax rate reduction 2010 election pledge.
The Coalition plan originally included a tax reduction for small businesses, but the nation’s top 3200 earning firms would pay a 1.5% levy to fund the Coalition’s paid parental leave scheme.
The Greens, who would obviously support any tax on miners, are refusing to allow the company tax rate reduction for large companies. As of yesterday, they were supporting the reduction for businesses with a turnover of less than $2 million, and were considering the reduction for businesses under $5 million.
At the time, the Coalition decided that although it opposed the mining tax, it could not be seen to oppose company tax cuts.
The Henry Tax Review had originally recommended a tax cut from 30% to 25% for businesses. However, there are budget constraints on doing this right away. The Senate will likely pass the new mining tax legislation by the end of next week, but the associated company tax rate cuts will be part of budget legislation introduced to the House of Representatives on the second Tuesday of May.
The Senate, with it’s new will pass the mining tax legislation by the end of next week but the company tax cuts will be subject to separate budget legislation and are likely to be incorporated with other measures to help businesses cope with the pressures of the mining boom.