More than half of Australians want to see personal income tax cuts in next Tuesday’s federal budget.
Given the many hints by the Turnbull government, they won’t be disappointed.
An Ipsos poll of 1000 people across the country conducted on behalf of the Chartered Accountants Australia and New Zealand found 60.2 per cent of respondents put personal tax cuts as their top priority for Treasurer Scott Morrison’s third budget.
Just 15.7 per cent backed a company tax rate cut.
But Chartered Accountants’ Michael Croker said these results show that Australians want change.
“Across the world, we’ve seen reductions in company and personal tax rates but our tax settings have remained steady, with the perception that we are uncompetitive,” he told AAP.
The government fell short of the numbers in the Senate just before Easter to pass legislation that would see the company tax rate cut from 30 per cent to 25 per cent over the decade.
At this stage, the coalition can rely on 37 of the 39 votes needed to pass the bill.
“I continue to talk to the Senate crossbench, with those who are prepared to talk to us,” Finance Minister Mathias Cormann told AAP ahead of next week’s three-day sitting for the handing down of the 2018/19 federal budget.
“As soon as the government believes we have majority support in the Senate we will bring the legislation on.”
So far the government has passed cuts for firms with a turnover of up to $50 million.
This followed a separate reduction for small businesses with a turnover of up to $2 million from 30 per cent to 28.5 per cent in 2015.
A new study found the latter reduction was either pocketed, invested or went towards new jobs but did little to boost wages.
Economic consultancy firm AlphaBeta, commissioned by Xero, found more than half of the tax relief went towards cash holdings – such as to pay down debts – while 27 per cent lifted investment.
Nearly one-fifth was used by businesses to hire workers but only three per cent used the tax cut to raise wages.
AlphaBeta’s Andrew Charlton, a former adviser to Kevin Rudd, says perhaps wage impacts take time to come through.
The Business Council of Australia is lobbying Senate crossbenchers to agree to the government’s broader company tax cuts.
Chief executive Jennifer Westacott said the report did recognise businesses invested and hired more people.
She said their own surveys show 30 per cent of large corporations would start to pay people more if they received a tax cut.
“If 30 per cent of Australian companies pay people more that’s actually a lot.”