SA independent senator Tim Storer is worried about the impact of company tax cuts on the budget.Independent senator Tim Storer is yet to be convinced that the $65 billion bill to cut the company tax rate over the next decade is worth it.
The South Australian senator and his cross-bench colleague Derryn Hinch stood in the way of the Turnbull government from passing the tax reduction before Easter.
“I have concerns regarding the impact to the budget deficit and the government debt over time,” Senator Storer told reporters in Sydney on Tuesday.
He said rather than cutting business tax, there may be other measures that can be undertaken to generate economic growth and benefits to wages such as social and economic programs, including infrastructure spending.
He said the government has yet to provide him with its plan for the reintroduction of the bill “if they so do”.
“I am responding to their request to have further consultations with economists and other stakeholders,” he said.
Senator Storer was attending a Senate hearing into claims by the Business Council of Australia and several large companies of the benefits of cutting the corporate tax rate to 25 per cent from 30 per cent.
The council, along with the likes of Qantas and Woolworths, sent a letter to all senators last month urging support for the tax plan, stating they would commit to investment in Australia and saying this will lead to more employment and stronger wage growth as the cuts take effect.
Senator Storer said such claims are in line with economic theory,
“(But) I still see the current proposal as modest relative to its costs,” he said.
Business Council chairman Grant King told the hearing he would have preferred broader tax reform as the council had urged two years ago.
“However, the absence of a broad tax reform agenda should not be a reason to delay any tax reform,” he said.
Cutting the corporate tax rate would be a good first step because it is the most damaging federal tax.
“Treasury analysis shows that the 30 per cent company tax rate is the most harmful federal tax in terms of its impact on economic growth,” Mr King said.
He insists the plan is “measured, fiscally responsible and fully accounted for” and would send a signal for investment.
“Investment allows businesses to expand, hire new workers, and become more efficient, to enter new markets and export.”
He also pointed to Treasury modelling showing half the benefits from reducing the tax rate would flow to Australian workers and households.
“Government revenues would be around $4 billion higher – in today’s terms – every year. This will help fund services we all want and need.”
Australian Associated Press