Thursday, March 15, 2012
Labor's plan to cut company tax from 30 per cent to 29 per cent is too modest, but in straitened times, it would help business to stay in business, to keep workers in jobs and to invest in the future.
Its goal is to redistribute some of the revenue from the mining tax to companies that do not benefit from the mining boom.
It would have done that more convincingly if the corporate tax rate had been cut to the 25 per cent proposed by the Henry report, or even the 28 per cent Labor first proposed.
But the budget's revenue base has been badly eroded by the losses run up by companies and investors during the GFC. Treasury secretary Martin Parkinson warns these will hold down revenue for a decade. This is a start; it is better than nothing, and it is in the interests of the country that it be passed.
The goal of the tax cut applies equally to small and big business. There is no economic reason to give a tax cut to one group but not the other, as the Greens propose. The Greens have taken this stand for political reasons, for some brand differentiation to present them as a friend of small business.
That won't wash. The Australian Democrats had a small business constituency, but the Greens are a different party. If they want economic credibility, their policy should be to simplify and streamline the tax system to remove dubious deductions and make it more of a level playing field not to create artificial distinctions between "good" small business and "bad" big business.
As for the Coalition, its stance is pure opportunism. It is in favour of cutting the tax, but it wants to deliver the cut itself. So it opposes Labor cutting taxes, even when it recognises that this would be good for the economy. The clear implication is that the Coalition does not want the economy to improve, lest that hurt its chances of winning office in 2013.
Is it too much to ask that, just once, the Coalition should do something in the interests of the country, not themselves? And, likewise, that the Greens do not oppose good policy just to promote their own brand?