Biz tax cut chopped from Federal Budget

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Biz tax cut chopped from Federal Budget
Treasurer Wayne Swan delivers his fifth budget.

The Federal Government’s promised 1 percent cut to the business tax rate was nowhere to be seen in the 2012/13 budget announced tonight, which sought to balance the need to return to surplus with providing relief to middleclass voters.

The cut to the 30 percent business tax rate was one of the sweeteners accompanying the Government’s controversial mining tax – a 2 percent cut was promised with the original super profits tax – but opposition from the coalition and the Greens has blocked its passage through the parliament.

The Greens said a universal company tax cut was too large a gift to big businesses, calling for relief to be directed specifically at smaller companies. Treasurer Wayne Swan tonight repeated his determination to usher in a 1 percent cut to the business tax rate in next year's budget.

Scrapping the cut delivered $4.6 billion of the government’s $34 billion in savings to support its goal of converting the current deficit of $44 billion to a $1.5 billion surplus next year.

Swan predicted the government would deliver four budget surpluses in a row, a statement which triggered raucous heckling from across the chamber. 

Defence spending took a $5.7 billion hit, while super benefits for older Australians, international aid and government-subsidised medicines are also in line for a major trim.

Despite trimming back in several areas the Government also announced extra spending for parents with school children, aged care, generous support for dental programs as well as the $1 billion-plus national disability insurance scheme (NDIS).

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Affirming its commitment to helping small businesses, the Government said it would introduce the so-called "loss carry-back" tax break, allowing businesses to write off losses of up to $1 million against previous profits, an initiative expected to benefit some 110,000 businesses.

“This will support businesses when they need it,” Swan said.

Small businesses will also receive a $6500 instant asset write-off to help with the acquisition of business equipment, a measure expected to benefit 2.7 million Australian companies. An immediate write-off up to $5000 is available for motor vehicles. 

The Government estimated this year's budget would deliver $3.7 billion of relief for Australian small businesses.

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