Malcolm Turnbull’s fight to slash taxes for big business is over, with the government admitting defeat in the Senate.
The prime minister dumped the controversial plan to cut the corporate rate for big businesses from 30 to 25 per cent on Wednesday.
“We will not be taking the tax cuts for larger companies to the next election,” Turnbull told reporters in Canberra.
Instead, he said the government will look at bringing forward already legislated cuts for businesses turning over up to $50 million.
Fighting for his own political life, Turnbull was at pains to make it clear his team had done everything it could to get the big company cuts it had promised over the line.
“We’ve negotiated very hard. We’ve offered to exclude the big banks,” he said.
But the prime minister said the coalition had to acknowledge it didn’t have the numbers – or in other words, “the iron laws of arithmetic”.
He lamented the end of bipartisan support for cutting company tax after the legislation was defeated in the upper house with minor parties supporting Labor in opposing the plan.
Labor will eventually come around to the idea, Turnbull later suggested.
“Australia needs to have competitive taxes. There is no question about that,” he told parliament during question time.
Australian Retailers Association executive director Russell Zimmerman told IR that the corporate tax rate – one of the highest in the developed world – has broader effects for the whole economy.
“If Australia does not cut the tax rate for all businesses to 25 per cent, retailers of all sizes will find it difficult to reinvest in their businesses and grow employment,” he said.
“When a business does well they create more jobs, and this is beneficial for employees, retail businesses, consumers, and the overall economy. Without these tax cuts, retailers will not be able to reinvest in their business and employ more staff – which is a poor outcome for everyone.”
Shadow treasurer Chris Bowen said Turnbull now had no economic plan.
“The parliament has today spoken and defeated his one-point plan,” Bowen said.
The Greens and poverty-fighting group Oxfam are also glad to see the back of the cuts.
“Dumping the plan to hand big businesses a tax cut is a major win in the bid to tackle the widening inequality gap in Australia,” Oxfam Australia chief executive Dr Helen Szoke said in a statement.
Former minister Peter Dutton, who is weighing up a second challenge to Turnbull, said the tax cuts funding should instead go to households or small businesses.
AAP
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