Turnbull’s Taxes Temporarily Toppled
The Coalition’s push for Reaganomics in Australia.
Opponents of trickle-down economics can rejoice for the time being; the Turnbull government has conceded that it does not have enough votes in the Senate at the present time to secure the passage of Turnbull’s controversial company tax cuts. The Coalition’s proposal would have lowered the company tax rate from 30 to 25 percent, potentially reducing taxes on companies by $65 billion annually.
Despite an open letter penned by over a dozen Australian corporations, and lobbying by Coalition partners, which included granting funds for 1000 apprenticeships throughout regional areas to secure One Nation’s support, the Turnbull government were unable to secure the required number of votes to ensure the tax cuts would pass. This was largely due to crossbenchers Derryn Hinch and Tim Storer, who both stated that they would not be supporting the proposed cuts in their current state.
Hinch expressed concern that the Big Four banks (NAB, Commonwealth, ANZ, and Westpac) would receive economic benefits whilst facing a royal commission inquiry, and stated that he would be willing to support the proposal if these banks were excluded; the Coalition refused. Storer echoed calls from the public that the lost revenue from company tax would be better spent on education, health, and infrastructure, and expressed concern for the overall sustainability of the proposal over a complete tax reform.
Owing to the lack of required support for the proposal, the Coalition have ceased debate and discussion on the proposal in the Senate until May, whereupon they hope to have convinced enough crossbenchers to vote in favour of the cuts without needing the support of Hinch or Storer. Treasurer Scott Morrison is optimistic; pointing to One Nation’s support despite previously rejecting the idea of this proposal as evidence that progress can still be made between now and May.
The Coalition’s faith in trickle-down economics, the theory that reducing taxes on businesses and companies will stimulate business investment and lead to wage increases in the long term, has not been shared by the Labour Party, who have opposed the proposal and have committed to repealing the tax cuts if they had been passed through the Senate by the next time Labour holds government. Malcolm Turnbull has subsequently declared that the Coalition will take the issue to the next election if need be, and that he welcomes a conversation with Opposition Leader Bill Shorten on the issue. Given the Coalition’s willingness to take this proposal to the next election, and Shorten’s pledge to repeal the tax cuts if they are legislated, it is very likely that Turnbull’s tax cuts will become one of the most crucial elements of the 2019 federal election.