Business is becoming increasingly worried the Turnbull government is planning to dump company tax cuts for the high end of town.
It’s looking less likely the Senate will approve Treasurer Scott Morrison’s $50 billion grand plan that aims to get the corporate rate down to 25 per cent within 10 years.
The Australian Chamber of Commerce and Industry has warned the country’s economic competitiveness is at risk unless action is taken on the tax rate.
“We need internationally competitive company tax rates across the entire economy,” chamber chief executive James Pearson said.
After six months of on-off discussion the legislation has still to clear parliament’s lower house where the government has a majority.
Debate was adjourned on Thursday and will resume next week at the earliest.
The tax plan was the centrepiece of the 2016 budget, handed down 10 months ago.
Mr Morrison wants his legislation dealt with before the end of next week – the final sitting before the May 9 budget – so companies with an annual turnover of up to $10 million get a tax cut mid-year.
Key crossbench senators believe that is probably as far it will get, with cuts for larger businesses “off the table for now”.
“I’m saying they’ll split the bill to get something through this time and they’ll maybe go back to it,” independent senator Derryn Hinch said.
Fellow crossbencher Jacqui Lambie also wants the cuts limited to small business, as does the Nick Xenophon Team.
If the plan is about to be split, Mr Morrison isn’t saying, telling parliament on Thursday he supported the tax plan with his “heart and soul”.
The $50 billion plan incrementally lowers the tax rate, starting with a reduction to 27.5 per cent for companies with a $10 million turnover this year, then firms with a $25 million next year and so on until all business have a 25 per cent rate in a decade’s time.
Companies presently pay a 30 per cent rate, apart from businesses with a turnover of less than $2 billion, which pay 28.5 per cent.
Labor remains opposed to the cuts, other than for those firms with a turnover of less than $2 million.
“You have to draw the line somewhere,” opposition finance spokesman Jim Chalmers said.