A leading welfare advocate says the Turnbull government should not be pursuing business and personal tax cuts when the budget can’t afford it and essential services are being slashed to pay for them.
Australian Council of Social Service chief executive Cassandra Goldie also rejects the government’s mantra that a cut in the business tax rate will result in higher wages.
‘We have got corporations that are extremely profitable today and we are not seeing the kind of wage movements the treasurer seems to suggest would be delivered,’ Dr Goldie told reporters in Canberra on Tuesday.
Wage growth is flatlining at a 20-year low and only just keeping in line with inflation.
Dr Goldie is not alone, with the latest Essential Research survey finding fewer than a third of respondents believe a corporate tax rate cut to 25 per cent for all businesses will feed through to workers’ pay.
The survey also found almost three-quarters of Australians want businesses to be forced to pass on a proportion of planned tax cuts as a pay rise for workers, an idea that drew support from voting groups across the political divide.
Finance Minister Mathias Cormann is sticking to his guns, saying the effects of a tax cut would be ‘immediate’.
‘The only way we can secure more jobs and higher wages instead of increases in the unemployment rate is by making sure that the businesses that have to pay for them … have the best possible opportunity to be successful and profitable into the future,’ he told reporters.
But shadow treasurer Chris Bowen is still questioning how the business tax cuts will be funded.
‘You can’t just say it’s in the budget so it’s paid for,’ he told ABC radio.
‘If I just said ‘Oh, it’s paid for because it’s in our budget, but I’m not going to tell you the particular measures that will pay for it’, well I’d be drummed out of the business and so should (Treasurer) Scott Morrison be if he’s going to try that sort of sophistry.’
Greens senator Sarah Hanson-Young said there was no guarantee that giving big business tax cuts would lift wages.
‘This is the biggest furphy,’ she told reporters in Canberra.
Council of Small Business of Australia head Peter Strong said small firms would prefer a cut in payroll tax rather than company tax cut but says that is a state issue.
‘We know that it creates whole new problems for states with their budgets,’ Mr Strong told Sky News.
But he also said Australia would become internationally uncompetitive if the corporate tax rate is not cut.