Small businesses and workers will not benefit from the Federal Government’s tax cuts for big businesses a tax expert warns, as the government comes close to passing the legislation.
Legal Consolidated Barristers and Solicitors tax lawyer Dr Brett Davies is concerned small businesses would not see any advantages from the legislation, despite the legislation nearly receiving unanimous support.
“Most small businesses in Australia don’t operate out of a company. They operate out of a family trust, sole proprietors and partnerships,” Dr Davies said.
“Therefore it is of very little value to small business.”
He believed workers could also not expect to receive higher wages.
“They’re going to start paying more money to employees? You’ve got to be joking. That’s not in the best interests of the shareholders,” he said.
“Young people will not see one single red cent of this benefit.”
“I think it’s a furphy to suggest that the big businesses are now going to start playing people more money because of tax rate’s lower.”
Dr Davies said large companies would gain financially from the legislation, giving them an advantage over smaller businesses.
“Big businesses particularly the offshore companies have been paying very little tax in this country. Very little tax,” he said.
“Now we change the laws to actually start making them pay tax in Australia, now they’re going to reduce the tax rate.”
“They’re going to get a double win. It’s not right.”
The cuts are close to passing the Senate, with only Derryn Hinch and South Australian newcomer Tim Storer the remaining crossbenchers yet to sign on.
Mr Hinch wanted the big four banks exempted from cutting legislation which would see the rate drop from 30 per cent to 25 per cent, while Mr Storer was still considering the legislation.
The Business Council of Australia leadership plus 10 chief executive officers also sent a letter to all senators promising to invest more in Australia and ultimately increase wages if the legislation is passed.
“If the Senate passes this important legislation we, as some of the nation’s largest employers, commit to invest more in Australia which will lead to employing more Australians and therefore stronger wage growth as the tax cut takes effect,” the letter said.
“We believe a reduction in the corporate tax rate, as proposed through the government’s enterprise tax plan, is urgent and vital to keep Australia competitive.”
However, the legislation has faced criticism from the opposition leader Bill Shorten, who called it anti-competitive.
“Shorten has a number of different agendas that he’s pursuing at this point and certainly he’s got nothing to lose exactly by not supporting the legislation,” Murdoch University Politics and Policy lecturer Dr Ian Cook said.
He said the cuts were “very much about” a potential federal election.
“(If) they don’t deliver on it, we’ve got those questions about ineffective government,” Dr Cook said.
“If they get the effects they were claiming they were going to get, then they can go back to the Australian people and say ‘we delivered, we made promises, we delivered on those promises.”