Coalition promises to slash tax rate for businesses
THE business community has applauded the Coalition's $5 billion promise to cut company tax, but has called on it to drop its plan to tax Australia's biggest businesses to pay for its generous paid parental leave scheme.
In what could end up being one of the most expensive promises made during the Federal Election campaign, the Coalition announced on Wednesday it would slash the tax rate for 750,000 businesses from 30% to 28.5% from 2015.
Effectively, Australia's top 3750 businesses would receive no net benefit from the change because of the Coalition's proposed 1.5% levy to pay for its generous paid parental-leave scheme.
Australian Chamber of Commerce and Industry chief executive Peter Anderson welcomed the Coalition announcement, describing it as a "sensible, not a radical proposal".
"But it needs to be part of a broader plan to strengthen the economy, and be fully funded so the budget can return to surplus over the cycle," Mr Anderson said.
"Reducing company tax will boost business confidence, attract new investment and take some pressure off the high cost of doing business. Each are objectives that must be at the heart of the next government's economic plan."
But Mr Anderson again called on the Coalition to consider scrapping the PPL scheme levy.
He said the proposed company tax cut looked like an "offsetting measure" for the big businesses that would be liable to pay the levy.
"We don't agree with that approach and consider it to be an excessive parental leave scheme," he said.
Earlier, Opposition Leader Tony Abbott said the Coalition's $5 billion pledge had been costed and the savings measures announced in his budget reply speech in May.
Mr Abbott said the savings he outlined in his budget reply would be more than enough to pay for the company tax cut as well as keeping the compensation linked to the carbon tax, which the Coalition would repeal in government.
Scrapping Labor's increased humanitarian migration intake, reducing the Commonwealth Public Service by 12,000 people, delaying by two years increases to compulsory superannuation and ceasing the low income superannuation contribution were just some of the savings Mr Abbott flagged in May.
Mr Abbott said cutting the company tax rate would "boost jobs and strengthen the economy", citing one of the findings of the Henry Tax Review.
He claimed Labor had reneged on its promise to reduce company tax.
Labor was quick to call on the Coalition to spell out precisely how it planned to pay for the company tax cut.
But Treasurer Chris Bowen said that while reducing the amount of tax businesses paid was a "fine ambition", it had to be done in a "fiscally responsible way".
Meanwhile, the Greens also called for a 2% reduction to the company tax rate for Australia's 600,000 small businesses.
Costing by the Parliamentary Budget Office showed the measure , which would come into effect from next year, would shave $1.75 billion from the budget during the next four years.