(Bloomberg) -- Australian Prime Minister Malcolm Turnbull’s government will this week seek to win over enough cross-bench lawmakers to legislate cutting the corporate tax rate to 25 percent, following his victory to reduce personal levies.
“We now have one of the highest tax rates in the world,” Finance Minister Mathias Cormann said in an Australian Broadcasting Corp. interview on Sunday, referring to the current 30 percent imposed on companies with annual revenue of more than A$50 million ($37 million). “Our intention is to deal with it this week and our intention is the secure the necessary support through the Senate.”
Turnbull is seeking further momentum to his legislative agenda after last week winning parliamentary approval to cut personal income taxes by about A$144 billion over a decade. His Liberal-National coalition, which has been distracted by infighting over policy as well as a scandal that claimed his deputy, trails in opinion polls and needs to win over more voters with an election less than a year away.
The government’s previous attempt to pass the tax cuts in full in March 2017 failed, and it was forced to water down the plan to preclude businesses with revenues above A$50 million. It’s yet to win public backing from eight of the 10 cross-bench lawmakers it needs to pass the change in the 76-seat Senate this week, before parliament enters a six-week hiatus.
The tax cuts are needed after the U.S. reduced its corporate rate from 35 percent to 21 percent and France legislated a cut from 33 percent to 25 percent, Cormann said.
“If we continue to impose higher taxes on businesses here in Australia than are faced by just about every other business in every other part of the world, we are putting the workers in Australia at a disadvantage,” he said.
The corporate tax cuts won’t filter through to individual taxpayers, said Shadow Finance Minister Jim Chalmers, who estimates they will cost the budget A$80 billion over the next decade. His Labor Party is arguing average Australians don’t want multinational corporations and big banks to pay less in levies at a time when the budget remains in deficit and a wide-ranging public inquiry has exposed a string of scandals in the banking industry.
“The vast majority of these tax cuts would actually be sprayed around overseas and offshore, and would be spent on things like executive bonuses and pumping up dividends,” Chalmers said in a Sky News interview on Sunday. “We won’t get the bang for buck that we need in the Australian economy.”
Labor is also vowing to repeal the bulk of the income-tax cuts should it win the next election, saying they aren’t affordable and are directed mainly at higher-income earners.
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