Turnbull Government Forced to Delay $36 Billion Tax Cut After Falling Two Votes Short In Senate

March 28, 2018 Last Updated: March 28, 2018

SYDNEY—Australian Prime Minister Malcolm Turnbull has been forced to delay introducing a bill to cut corporate tax after falling two votes short of a majority in the upper house.

The center-right leader wanted to cut the corporate tax rate to 25 percent from 30 percent this week.

Government Senate leader and Finance Minister Mathias Cormann told the upper house late on Tuesday that the Coalition would “not give up” and will now introduce the tax cut bill in the next week of parliament scheduled for May. He said the government will put in the work needed to win over the Senate crossbench.

After two weeks of negotiations, the government had secured votes from four independent senators and One Nation’s bloc of three senators, while Labor, the Greens and the Nick Xenophon Team remained opposed.

In the end, a holdout from two independent senators — Derryn Hinch and former ALP member Tim Storer — left the government with 37 of the 39 needed to pass the bill.

“The government has made a decision that we will need to do some more work,” Cormann said.

“We are committed to these tax cuts because we passionately believe they are in the best interest of working families across Australia.”

The delay leaves Turnbull without an upbeat message as he approaches a 30th straight Newspoll, a wide-watched opinion poll which has for the last 29 surveys had him trailing the Labor opposition.

Losing 30 Newspolls would be a symbolic blow for Turnbull since he used that benchmark to justify ousting former leader Tony Abbott in 2015. The next Newspoll is due out on April 8.

“The government’s failure to pass the tax cuts means it has nothing to change the narrative that it is a government stuck in a rut,” said Haydon Manning, a political science professor at Flinders University in South Australia.

“Turnbull desperately needs some good news after several months of negative headlines.”

Turnbull has struggled for months against a tide of long-running scandals over which he has seemed to have limited control.

The second half of 2017 was dominated by a string of politician resignations amid questions about whether they held dual citizenship, a status which is banned for elected officials in Australia.

The start of 2018 was then consumed by then deputy prime minister Barnaby Joyce’s admission that he was expecting a child with a former employee. Joyce stood down in February after media reports he was the subject of an unrelated misconduct complaint.

Lobby group the Business Council of Australia (BCA) has been on a publicity offensive for corporate tax cuts in exchange for employing more people and higher wages.

The BCA and 10 chief executive officers wrote to all senators with this promise, but an internal BCA survey of its member CEOs found just one in five planned to use company tax cuts to pay higher wages or employ more people, the Australian Financial Review reported.

The BCA has said that it has become an “easy target” for populist anti-business campaigns amid the political posturing between the major parties.

“I remain to be convinced that… I should support this bill in its current form,” Storer, who joined parliament in January, told the upper house on Wednesday.

“This bill is a narrowly cast proposition of change (and) I have doubts that the decision to reduce company tax for all companies is prudent to undertake in the face of Australia’s budget deficit and debt”, Storer added. He said he believed the money would be better spent on areas such as R&D, education, health and infrastructure to “generate prosperity and enhance fairness.”

Hinch was holding his support on a range of demands which the government was working to accommodate, including more support for pensioners and low-income renters.

On Storer’s demands, Cormann said that the government was always prepared for broader discussions about tax reform and that the focus is on “making sure our tax system is as growth-friendly as possible, as efficient, and least-distorting on the economy as possible, and as equitable as appropriate,” he told Sky News.

By Byron Kaye and Colin Packham

 

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