Scott Morrison flags 'difficulties' in cutting both company and income taxes in May budget

Treasurer Scott Morrison has flagged there could be "difficulties" in cutting company tax, as small businesses warn they should not be ignored in the federal budget.

Key points:

  • Government remains committed to tackling bracket creep, admits will be a challenge
  • Opposition earlier criticised Mr Morrison on address, saying he failed to outline any substantial policies
  • Peter Strong said employers should not be forgotten in May budget

Mr Morrison said he has been forced to take a sober approach ahead of the May budget, flagging "modest" cuts to income tax.

It follows a decision not to go ahead with an increase to the Goods and Services Tax (GST), following months of debate.

The Government remains committed to tackling bracket creep, but admits it will be a challenge without lifting taxes or cutting spending elsewhere.

Mr Morrison said while he is "on the hunt" to cutting the company tax rate, it would need to be carefully thought through.

"We've made no secret of the fact that we would like to see company tax rates lower, because it does make us more competitive and it's good for jobs and growth," Mr Morrison told Sky News.

"But you have to fund them, and to ask Australian households to pay more tax in order to fund company tax cuts, well, I think the difficulties with that are fairly obvious."

Mr Morrison had earlier been criticised for yesterday's address to the National Press Club by the Federal Opposition, who claimed he failed to outline any substantial policies as part of the Government's tax overhaul.

But the Treasurer said the purpose of the speech was to provide an update on the Government's efforts to reduce taxes and government spending.

"Only through lower expenditure are we able to deliver a low-tax outcome into the future," Mr Morrison told ABC's 7.30.

"Now that's a fairly clear point. It's a clear objective for the budget.

"My purpose today was to set the frame for the budget and that was the clear priority."

Peter Strong from the Council of Small Business of Australia (COSBOA) said employers should not be forgotten in the May budget.

"The great number of tax collectors — when it comes to the GST and when it comes to PAYG — are of course the small business people."

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COSBOA's pre-budget proposal has detailed plans to provide generous corporate tax cuts for small businesses if they accept not to claim any deductions over a three-year period.

Mr Strong argues it would reduce the paperwork for small businesses, while allowing the Australian Tax Office to target aggressive tax minimisation by bigger businesses.

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"We'll give you a lower tax rate if you don't claim deductions, so for three years you say 'I'm not going to bother with these complicated tax returns but I'll take the lower tax cut'," he said.

"And there's some businesses out there that will say 'thank you very much, I don't want to bother with tax returns, the complexity. I know what my tax is going to be and I can move on that'.'"

He suggested a discount of between 5 per cent and 15 per cent.

Meanwhile, the Governor-General of Australia, Sir Peter Cosgrove, will this morning swear in the Federal Government's new ministry, following the weekend reshuffle by Prime Minister Malcolm Turnbull.

New Nationals Leader Barnaby Joyce will be formally appointed deputy prime minister.

Steve Ciobo will be sworn in as trade minister, along with Darren Chester as infrastructure and transport minister and Alan Tudge as human services minister.

Six ministers from Mr Turnbull's first frontbench — unveiled in September last year — have now left the ministry.

Andrew Robb and Warren Truss are retiring. Jamie Briggs, Stuart Robert and Mal Brough have been caught up in scandals and Nationals MP Luke Hartsuyker has been pushed to the backbench.

Source: ABC News

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