Corporate Tax Cuts Dropped as Australian PM Clings on to Leadership

August 22, 2018 Updated: August 22, 2018

Prime Minister Malcolm Turnbull has abandoned tax cuts for larger businesses after the policy failed to pass parliament.

The plan to have the corporate tax rate dropped from 30 percent to 25 percent for businesses with an annual turnover of more than $50 million was defeated in the Senate on Aug. 22.

The prime minister said the government would instead consider accelerating tax cuts for small- to medium-sized companies.

“We are going to review our enterprise tax plan, in so far as it applies to small and medium businesses and focus on how we can provide enhanced support, or perhaps an acceleration of the tax cuts for the small and medium businesses,” Turnbull said at a press conference on Aug. 22.

Currently, tax rates for businesses with an annual turnover of less than $50 million will be progressively lowered to 25 percent by 2026-27.

Turnbull also revealed the energy supplement for pensioners would not be abolished as previously planned. The payment, amounting to $14.10 per fortnight for singles and $10.60 per fortnight for a married couple, was designed to assist with household energy costs after the now-defunct carbon tax was introduced by the Labor government.

“It is absolutely clear to us that, with the issue of energy prices being so prominent, we will not move to repeal the energy supplement,” he said.

‘Unequivocal’ Support

Turnbull also told reporters he had ‘unequivocal assurances of continuing loyalty and support’ from cabinet ministers, rejecting their resignations after they had supported former Home Affairs Minister Peter Dutton to lead the Liberal party.

The prime minister narrowly staved off a leadership challenge from the former Queensland police office after calling a snap leadership spill on Aug. 11. Turnbull won 48 votes to 35. Dutton has since resigned from the ministry and now sits on the backbench.

According to The Australian, eight cabinet members offered to resign in the wake of the spill, including Minister for Health Greg Hunt, Minister for Trade Steven Ciobo, and Minister for Human Services Michael Keenan. These were not accepted by Turnbull.

Senator Concetta Fierravanti-Wells resigned as minister for international development and the ­Pacific, in an open letter accusing the prime minister of eroding the voice of the party’s conservative members and moving too far to the left.

A number of the ministers who backed Dutton, including Hunt and Ciobo, affirmed their support of the prime minister in parliamentary question time on Aug. 22.

Dutton Starts Campaigning

The former home affairs minister confirmed he was canvassing colleagues for another bid at the party leadership.

“You don’t go into a ballot believing you’re going to lose and if I believe that a majority of colleagues support me, then I would consider my position,” he told 3AW radio station on Aug. 22.

“Of course I am [working the phones]. I’m speaking to colleagues. I’m not going to beat around the bush with that.”

Dutton also outlined his policy platform, which included removing the GST from electricity bills and a royal commission into energy and fuel companies.
“I think one thing that we could do straight away in this next billing cycle is take the GST off electricity bills for families,” Dutton told Triple M Melbourne.

“It would be an automatic reduction of 10 per cent for electricity bills and people would feel an impact straight away.”

Treasurer Scott Morrison, however, said the policy would cost about $7.5 billion over four years and the Commonwealth would have to reimburse the amount to the states.

“That would be an absolute budget blower,” Morrison told reporters in Canberra.

“You can make all sorts of promises about how much money you are going to spend but at the end of the day you have got to account for it.”

The ABC reports that Dutton is only a handful of votes shy of the 42 required to topple Turnbull, and a second leadership challenged is expected in the coming days or weeks.