Labor has thrown its support behind the Coalition's plan to lower the tax rate for small and medium businesses earning up to $50 million per year five years earlier than anticipated.
The 10-year plan was revealed as part of the federal budget back in 2016 when prime minister Scott Morrison was still treasurer under former PM Malcolm Turnbull. Under the original proposal, the tax rate for small businesses would have incrementally lowered from 30 percent to 25 percent each year until 2026-27.
At the same time, the definition of small business was gradually widened from a maximum annual turnover of $2 million to $50 million.
The government announced its intention to bring forward the tax cuts from 27.5 percent to 25 percent by five years. The proposal is expected to cost the government $3.2 billion over the next four years.
Opposition leader Bill Shorten and shadow treasurer Chris Bowen fronted media last week to voice their support for the new small business tax rate under a Liberal or Labor government, saying it would bring "certainty to the sector in a fiscally responsible way".
"Labor has always been the friend of small business. With a Shorten Labor government – 99 percent of businesses will receive a tax cut, no business will have their tax rate increased, and all businesses will be able to plan and invest with confidence and certainty," Bowen said in a media release.
To make room in its budget for the tax cuts, Labor said it would delay by its Australian Investment Guarantee by 12 months, which offers more tax offsets for businesses that invest in new technology.
"Labor has taken difficult decisions to be able to fund its policy commitments – such as making multinationals pay their fair share, reforming negative gearing, the capital gains tax discount, the tax treatment of trusts, managing tax affairs and dividend imputation," Bowen said.
As is to be expected in politics, Labor still had a crack at their opposition while supporting its policies. "The Liberals haven’t paid for the bringing forward of tax cuts to small and medium-sized business, but Labor will," Bowen added.
The Turnbull government was able to pass the initial 10-year plan back in 2017, but failed to extend the tax cut to businesses earning more than $50 million annually. A week after the proposed tax cuts failed, Turnbull was ousted as prime minister in favour of Scott Morrison.